Interpreting nonlinear semi-elasticities in reduced-form climate damage estimation

Interpreting nonlinear semi-elasticities in reduced-form climate damage estimation Observed changes in weather can reveal marginal impacts of climate change on economic outcomes and the potential for adaptation. When modeling the nonlinear relationship between weather and changes in economic outcomes empirically, model choice can confound the interpretation of marginal and percentage effects and their respective confidence intervals. I present a simple solution for better characterizing semi-elasticities of nonlinear climate damages, and evaluate its relevance in interpreting empirical climate damages. For small marginal effects, the implications of this interpretation error is small; for larger effects, however, the misinterpretation error can be substantial. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Climatic Change Springer Journals

Interpreting nonlinear semi-elasticities in reduced-form climate damage estimation

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Publisher
Springer Journals
Copyright
Copyright © 2018 by Springer Science+Business Media B.V., part of Springer Nature
Subject
Earth Sciences; Atmospheric Sciences; Climate Change/Climate Change Impacts
ISSN
0165-0009
eISSN
1573-1480
D.O.I.
10.1007/s10584-018-2197-z
Publisher site
See Article on Publisher Site

Abstract

Observed changes in weather can reveal marginal impacts of climate change on economic outcomes and the potential for adaptation. When modeling the nonlinear relationship between weather and changes in economic outcomes empirically, model choice can confound the interpretation of marginal and percentage effects and their respective confidence intervals. I present a simple solution for better characterizing semi-elasticities of nonlinear climate damages, and evaluate its relevance in interpreting empirical climate damages. For small marginal effects, the implications of this interpretation error is small; for larger effects, however, the misinterpretation error can be substantial.

Journal

Climatic ChangeSpringer Journals

Published: May 14, 2018

References

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