The economic impacts of climate change:: Evidence from agricultural output and random fluctuations in weather

This paper measures the economic impact of climate change on US agricultural land by estimating the effect of random year-to-year variation in temperature and precipitation on agricultural profits. The preferred estimates indicate that climate change will increase annual profits by $1.3 billion in 2002 dollars (2002$) or 4 percent. This estimate is robust to numerous specification checks and relatively precise, so large negative or positive effects are unlikely. We also find the hedonic approach-which is the standard in the previous literature-to be unreliable because it produces estimates that are extremely sensitive to seemingly minor choices about control variables, sample, and weighting.