Bo-Yeon Jang

Adaptation is an increasingly attractive option for addressing the economic impacts of climate change. However, climate impacts are subject to significant climate uncertainty that will change over time as emissions are observed and geophysical models are improved. I use an ensemble of climate models to quantify the current extent of climate uncertainty in country-level economic impacts and construct a new empirical object to quantify its evolution. Incorporating these estimates in a real options model, I find that the optimal level of investment decreases in expectation from increasing the speed of uncertainty resolution. Because uncertainty from climate models comprises the majority of climate uncertainty, the results suggest increased climate science funding in the present may lead to savings in adaptation costs for vulnerable countries.

We develop a novel method for assessing the effect of constraints imposed by spatially-fixed natural resources on aggregate economic output. Applying it to estimate and compare the projected effects of climate change and population growth over the course of the 21st century, we find that standard population growth projections imply larger reductions in income than even the most extreme climate change scenario. Further, climate change and population growth will have their most damaging effects in similar places. Relative to previous work on macro climate impacts, our approach has the advantages of being disciplined by a simple macro growth model that allows for adaptation and of assessing impacts via a large set of climate moments, not just annual average temperature and precipitation.

Flooding risks have a profound impact on the housing market, but existing measures of the flood zone discount are often underestimated due to market valuation of insurance-mandated adaptation. This paper leverages quasi-experimental variation in adaptation mandated by the National Flood Insurance Program (NFIP) to examine how housing prices capitalize building adaptation. NFIP regulatory floodplain map updates affect property values by simultaneously providing a coarse signal of flood risk, while requiring higher construction standards. Exploiting the granular boundary variation in flood map updates, we isolate the valuation of flood-adapted homes and document an adaptation premium of 3.8%. The effect is robust to rich geographic and amenity controls, suggesting that housing markets capitalize the cost of climate adaptation through insurance requirements, which is previously overlooked by the flood discounts. Because this premium falls below typical retrofitting costs, it is unlikely to drive voluntary adoption of flood adaptation measures in existing properties.

Total fertility rate, the average number of children over a woman’s lifetime given current trends, is a key fertility statistic. Differences in TFR are often read as signals of behavior, but may also capture composition. I examine the contribution of behavior and composition for TFR variation over time and across regions in South Korea, which leads the world in lowest-low fertility. Decomposing TFR into age- and parity-specific fertility rates and parity rates by age, I find that composition effects comprise nontrivial portions of TFR differences for South Korea, sometimes exceeding that of behavior effects. Because shifts in demographic composition should influence TFR differently than behavioral distortions, this raises further concerns for the use of TFR to evaluate responses to fertility policy.