ESSAYS ON ADAPTATION TO CLIMATE CHANGE

Climate change represents a formidable challenge for mankind going forward. It is important to understand its effects. In this thesis I study how people adopt to climate change and argue that these responses could go a long way towards mitigating the effects of climate change. I show that in some cases accounting for such adaptation could completely reverse the negative effects of climate change. In the first chapter of my thesis I consider the general impact of adaptation without focusing on a particular adaptation mechanism studying mortality in Russia. Using regional monthly mortality and daily temperature data, I estimate a flexible non-parametric relation between weather and mortality. I find evidence that regions are better adapted to temperature ranges they experience more frequently. In particular, damages from the high heat are smaller in regions where the average summer temperature is higher and damages from cold are lower in regions where winters are usually more severe. On the basis of these estimates I propose a novel way to account for adaptation to climate change without restricting attention to one particular channel. Namely, I assume that if some currently cold region in the future will be exposed to the high heat on a regular basis, then its (future) response will be similar to the present response of a warmer region which currently is exposed to such heat on a regular basis. I illustrate my approach constructing predictions for the impact of climate change on mortality using business- as-usual temperature predictions from several climate change models. I find that the no- adaptation specification predicts 0.7 percent increase in mortality by 2070-2099. When adaptation response is taken into account, however, I forecast a decrease in mortality by 1 percent by 2070-2099. In the second chapter of my thesis I study migration as an adaptation mechanism to climate change. I estimate a discrete location choice model, in which households choose residence locations on the basis of potential earnings, moving costs, climate amenities, and population density. I treat population density as endogenous using geological structure as an instrument. This model allows me to estimate counterfactual migratory responses and welfare changes resulting from non-marginal changes in temperature, such as these predicted by most climate models. I also account for general equilibrium effects on population densities arising from individual migration decisions. I find that the costs of climate change are likely to be quite large. In the absence of migration, American households would require their incomes to increase by 20-30 percent on average to attain their present day level of utility. The distribution of those costs is uneven across geographical locations. Some areas in the South would require more than 50 percent increases in terms of current incomes, while some northern locations actually see benefits around 20 percent. Allowing for migratory responses decrease those extremes considerably because of the resulting shifts in population densities. For the hardest hit areas, migration would reduce the costs by more than 10 percent (4-5 percentage points). Areas benefiting the most from climate change without migration would see their benefits reduced due to migratory inflows from other locations