The economic geography of climate change: recent progress and open questions

Abstract Climate change is a spatial phenomenon, hurting some regions more than others. As a result, global warming will lead to a spatial reallocation of the world’s economic geography. Recent spatial integrated assessment models project substantial increases in spatial inequality while predicting modest aggregate losses. However, these global losses may be understated if models fail to account for multiple equilibria or migration-induced conflict. They may also be underestimated if models neglect spatial frictions due to stranded physical assets, endogenous migratory barriers, or moral hazard arising from the overprotection of vulnerable places.