CRS Reports on How Climate Change May Impact the U.S. Economy

The Congressional Research Service ("CRS") reviewed existing research on the economic effects of climate change.

CRS observed that the effects of climate change on the economy are subject to substantial uncertainty and differing views, that there may be different effects in different time spans, and that different sectors of the economy and different regions of the country will be impacted to different degrees. CRS concluded that there are both positive and negative effects, citing the potential for businesses to be disrupted by an increase in extreme weather events as a potential negative effect, but a boost in crop production from warmer weather as a potential positive effect. CRS said that the long-term effects are generally perceived as negative, as business output could potentially be severely impacted by a lack of emissions regulation.

In the report, CRS summarized two main avenues through which climate change can affect GDP: impacts on productivity and impacts on investments. CRS indicated that a rise in temperatures and extreme weather is associated with lower labor productivity though they stated that effects are not easy to measure and there has been variation across studies. On investments, CRS concluded that (i) while business investment may fluctuate in any given year, the short-term effects would likely be positive as the goods impacted by climate change are replaced, and (ii) if climate change causes a decline in productivity, it will negatively impact the incentive for businesses to invest.

CRS concluded that because of the temperature, climate and non-labor intensive workforce in the U.S., the country would likely see a smaller loss in productivity compared to other countries. CRS noted that the impact of climate change will impact infrastructure, housing and agriculture the most.