SUPERSTORM SANDY was a terrible disaster but an informative one.
When the storm swept ashore, lower Manhattan flooded and went
dark. A few miles south on Staten Island the storm took an awful
human toll in waterside neighbourhoods inundated by the surge.
In Midtown, however, the storm was little more than a gusty
rain. As in everything real estate, the nature of the danger
came down to location, location, location. In a new NBER working
paper, Klaus Desmet and Esteban Rossi-Hansberg look at the
importance of geographic variation in the effects of global
warming. Some parts of the world will be rendered unpleasant or
uninhabitable by sea level rise, temperature increase, droughts
and storms. But people use a fairly small portion of the earth's
available land area, and climate change (initially, anyway) will
have relatively moderate or even benign effects on some places.
In assessing the cost of warming, then, much depends on how
easily people, firms, and whole cities can move from one place
to another. This we