Categories: Newsletter Issue 2022:1

The Role of Health Economics Research in Informing an Effective Response to Climate Change

By Angélica Meinhofer

Climate change is one of America’s most significant long-term policy challenges. The use of fossil fuels, deforestation, livestock production, industrial processes, pollution, and other human activities are increasing global average temperatures. This growth in global temperatures has led to melting glaciers and ice sheets, rising sea levels, ocean acidification, intense and frequent droughts, wildfires and storms, among other adverse events – all of which have serious implications for human health and its determinants.

Climate-related decisions are being carried out by federal, state and local government leaders and agencies, businesses and individual citizens. Research at the intersection of health and environmental economics can help inform decision-makers regarding the adverse health implications of climate change, the effectiveness of public health and other policy responses, and the unanticipated consequences resulting from those policy responses.

I interviewed Dr. Tatyana Deryugina, Associate Professor of Finance at the University of Illinois Urbana-Champaign’s Gies College of Business; Dr. Teevrat Garg, Assistant Professor of Economics at the University of California San Diego’s School of Global Policy and Strategy; Dr. Matthew Gibson, Associate Professor of Economics at Williams College’s Department of Economics; Dr. Michelle Marcus, Assistant Professor of Economics at Vanderbilt University’s Department of Economics; Dr. Emily Pakhtigian, Assistant Professor of Public Policy and the Hyde-McCourtney Career Development Professor at Penn State University’s School of Public Policy; and Dr. Mark Paul, Assistant Professor of Economics and Environmental Studies at New College of Florida. They shared their thoughts about ongoing research at the intersection of health and environmental economics that may help inform the climate response evidence base, current gaps in the literature, and future research directions.

Q1: What are specific areas of inquiry in which health economics research is uniquely positioned to inform public health and other policy responses to climate change? What are some important studies in this literature?

Dr. Deryugina: Health economics research has done a lot to quantify the likely health consequences of climate change, although most studies focus on mortality. Examples of studies along these lines include Barreca et al. (2016), Carleton et al. (2020), and Heutel et al. (2021). Importantly, they don’t just document how high temperatures affect mortality, but also how income, long-run average temperature, and development more generally moderate the temperature-mortality relationship. Unfortunately, it is too late to limit policy to prevent the effects of climate change from materializing; we’re going to have to develop policies that mitigate the consequences of climate change and adapt. Health economics can help us understand what kind of policy infrastructure can be most helpful in this regard. How important is health insurance, for example?

Dr. Garg: Climate change results in direct insults to human health. Indeed, by most estimates, the effects of heat on mortality account for the largest component of the social cost of carbon (SCC) (Carleton et al. (2020)). Therefore, understanding the behavioral and medical factors that can modulate this relationship is of critical importance for adaptation. The realized effects of climate change will crucially depend on the extent to which we can weaken the relationship between ambient temperatures and experienced temperatures (e.g., air conditioners) and the relationship between experienced temperatures and health outcomes (e.g., through the provision of health care). The most important paper I have read on the latter is by Mullins and White (2020). They show that the relationship between heat and mortality considerably weakened with the rollout of community health centers in the US.

Dr. Gibson: Mortality effects from extreme temperature–both cold and heat–are probably a large share of the welfare loss from climate change. While there has already been good research in this area (e.g., Barreca et al. (2015), Barreca et al. (2016)), I am particularly excited about new work from Laura Bakkensen, Derek Lemoine, and Jeffrey Shrader, “The Value of Weather Forecasts.” The authors show that forecasts strongly moderate the mortality effects of extreme temperature, and investigate the mechanisms behind such moderation. This sheds light on human adaptation and avoidance behaviors. The Bakkensen et al. paper also implies that forecasting, and more generally disseminating environmental information, could be a very important policy lever in lower-income settings where indoor climate control is unavailable. Teevrat Garg has written several important papers on the impacts of extreme temperature in the developing world, including “Temperature and Human Capital in India” (with Jagnani & Taraz).

Dr. Marcus: Health economics research is uniquely positioned to inform our understanding of the impacts of climate change on population health through careful estimation using quasi-experimental designs that consider the role of avoidance behaviors. Not only is understanding the biological impact of climate change important, but policymakers must also take into consideration the role of avoidance behaviors and adaptation when designing policies to benefit human health. For example, Deschênes & Greenstone (2011) use year-to-year variation in temperature to estimate the likely impact of climate change on U.S. mortality, taking into account behavioral responses such as increased use of air conditioning. Relatedly, Barreca et al. (2016) provide empirical evidence on long-run adaptation opportunities that have mitigated the mortality impacts of extreme temperatures historically and find that air conditioning was a key driving factor in the U.S. Health economists are also well-suited to credibly measure the long run health consequences of exposures to climate change, such as through natural disasters. Accurately quantifying these impacts can help build a more complete picture of the overall costs of climate change to society. For example, a growing body of work focuses on measuring the long-run consequences of exposure to hurricanes on mortality, education, and income (Deryugina & Molitor, 2020; Karbownik & Wray, 2019).

Dr. Pakhtigian: Health economists are well positioned to identify how environmental factors affect health outcomes using causal frameworks; to evaluate the impacts of policies implemented to moderate the effects of climate change on population health; and to assess the distributional consequences of climate change. Recent empirical studies have examined the health consequences of climate change in the United States. There is evidence that weather-related conditions can be harmful to public health. For example, Barreca (2012) finds that increased temperature and humidity can increase mortality, especially in hot, humid areas. Further, Mullins and White (2019) provide evidence that heat can increase negative mental health outcomes, and Deryugina et al. (2020) show that natural disasters such as hurricanes delay elective medical procedures. Other work has examined the spillover effects of climate change policies on health, especially energy transitions. Both Komisarow & Pakhtigian (forthcoming) and Komisarow & Pakhtigian (2021) show that the closures of coal-fired power plants lead to health improvements among children, especially related to respiratory illness. Finally, work has also investigated the distributional impacts of climate change through the lens of environmental justice. Hausman & Stolper (2021) model information failures in this space, arguing that unequal pollution information can lead to unequal pollution exposures and consequences. Deryugina & Molitor (2020) show that place has implications for health outcomes, finding evidence of differential mortality depending on settlement location for migrants displaced by hurricanes. 

Dr. Paul: Often the links between health and climate are straightforward, as with the intensification of extreme heat and weather events. Yet health researchers can play an important role in helping decision makers better understand the stakes, along with potential policies to reduce vulnerability and increase resiliency. Other times the connection between climate change and public health is less obvious, in which instances research by health scholars is vital to document and understand these linkages. For example, recent research has linked higher temperatures to increased rates of suicide (Burke et al., (2018)). Health researchers have an important role to play in continuing to investigate how the climate crisis will turbocharge a health crisis unless major interventions occur, and quickly. One important area of continued work should be studying perhaps the largest health challenge associated with the fossil fuel economy: air pollution. In 2017, a study in The Lancet estimated that air pollution was responsible for seven million deaths a year (Landrigan, (2017)). More recent work puts the number even higher, finding air pollution from burning fossil fuels is responsible for roughly 1 in 5 deaths worldwide (Vohra et al., (2021)). Future work should continue to investigate the linkages between a warming world and public health, while incorporating health effects into economic models of climate change.

Q2: In your opinion, what are key gaps in the climate literature and future areas of inquiry that researchers at the intersection of health and environmental economics should prioritize?

Dr. Deryugina: The role of healthcare access is one such gap. We know that high temperatures lead to higher mortality and hospitalizations, especially in areas that aren’t used to high heat. We also know that mortality effects are lower in higher-income countries. But what we don’t understand is the extent to which healthcare access matters for these relationships. Is it all air conditioning? Or could improving access be important here?

Thinking about the welfare implications of increased healthcare utilization is important too. Because a lot of the observed healthcare is covered by insurance, it’s hard to know its value to the person getting the healthcare —it could be smaller than what insurance pays the provider, but it could also be substantially higher. Finally, we need to better understand the long-term health consequences of climate change. Most existing studies focus on short-run temperature fluctuations but can’t say much about the effects of longer-run exposure to high temperatures. How quickly do people adapt to higher temperatures?

Dr. Garg: There are three urgent gaps in the intersection of health and environmental economics where more research is needed. First, what aspects of the climate-health relationship can be weakened through public investments in health and healthcare. The focus here should be on finding cost-effective adaptation solutions and on reducing disparities. The reality of climate change is that we will see some temperature increases no matter the current mitigation efforts, and preparing poor, vulnerable, and marginalized populations to adapt to these increases will be vital. A second area will be to examine the take-up of governmental health and social protection programs. A key avenue of the fiscal cost of climate change is going to be the increased take up of social protection programs including spending on publicly funded health insurance. Examining this relationship will be key to ensuring the long-term fiscal viability of such support systems. Third, expanding our understanding of the aspects of health that are likely to be affected by climate change. Recent work suggests that heat affects physical and mental health, especially when adaptation strategies are limited (Masuda el at., (2021)). Understanding the dimensions of health that are affected by climate change and other environmental factors will expand our ability to reduce the damages from rising temperatures.

Dr. Gibson: In my view, the most significant gap is between weather, which is convenient to study, and climate, which is what matters for long-term welfare. Derek Lemoine has made a vital contribution with “Estimating the Consequences of Climate Change from Variation in Weather.” In brief, we cannot ignore expectations and dynamic complementarities. I am also strongly interested in direct utility losses from climate change–how much welfare is lost when it becomes unpleasant to work or exercise outside? The sorting literature has made a start on this question (e.g., Albouy et al. (2016)), but it hasn’t yet been answered conclusively, especially in low-income settings. There’s more to be done on how investment behavior around health and human capital responds to climate change. Finally, there are important questions around the political economy of adaptation, especially for forms of adaptation involving public goods (e.g., weather forecasts) or quasi-public goods (e.g., cooling centers).

Dr. Pakhtigian: One important topic in the intersection of health and environmental economics that requires additional research relates to the distributional impacts of climate change. While researchers have begun to investigate these distributional impacts, expanding this work to examine inequities in impact is critical at the local, regional, national, and international levels and has important policy implications. Another important topic that should be prioritized relates to averting behaviors. While there has been an increase in work investigating the linkages between environmental conditions—especially those shifting in severe or unpredictable ways because of climate change—and health outcomes, there is more limited evidence regarding the role of averting behaviors, in part due to a lack of data availability. Combining analysis of the impacts of environmental conditions and behavioral response on public health outcomes is another important area.

Dr. Paul: Climate change researchers have done an excellent job helping us understand the linkages between emissions pathways and warming targets. However much more work is needed to better understand the health implications of different emissions pathways. Not only do we need to better understand this in terms of speed, but also in terms of other technologies, each of which come with a degree of variation regarding health benefits and potential health drawbacks—think water contamination from lithium mining. 

Q3: What are some resources (i.e., datasets, funding, training, blogs, news sources) that health economists interested in studying the correlates of climate change should be aware of?

Dr. Deryugina: The NIH is a key funder of healthcare research, including the health effects of climate change. The Lancet Countdown on health and climate change is a good source of the current medical knowledge on climate change ( Resources for the Future has a good blog covering climate change, among other topics: In my own work, I have used Medicare administrative data to study a variety of health effects, and I am currently using this dataset to study the long-term health consequences of natural disasters. These are really rich longitudinal data that contain detailed claim information on millions of elderly and long-term disabled. Unfortunately, it is somewhat difficult to gain access to, and perhaps that’s why it hasn’t been as extensively used in studies of health and climate change as I think it should be. Ultimately, I think the best resource is other economists studying the effects of climate change!

Dr. Garg: The availability of data on weather, climate projections and air and water quality has exploded in recent years. This is especially true in developing countries where advances in satellite data have made measurement tools globally available (Donaldson & Storeygard, 2016). In terms of funding, the latest entrant into the space is JPAL’s King Climate Action Initiative (K-CAI). Other funding sources in the international space include the International Growth Center and Private Enterprise Development Laboratory. In the U.S., the Sloan Foundation and the Washington Center for Equitable Growth fund climate-health research.

Dr. Gibson: At times, our discipline focuses too much on wealthy countries with abundant data, the U.S. in particular. Reading the foreign press, e.g., the Guardian or the Times of India, can nudge one’s thinking out of the usual patterns. I appreciate the Guardian’s “Green Light” environmental newsletter.

Dr. Marcus: Two papers that provide excellent overviews of some of the recent Economics literature related to climate change include (Deschênes, 2014) and (Dell, Jones, & Olken, 2014). The Land and Resource Economics Network (resecon) is a great listserv that facilitates communication on climate change and topics related to land and resource economics. You can subscribe via the AEA (

Dr. Pakhtigian: In recent years, there has been an increase in the use of spatial and remote sensing data products to conduct analyses of the impacts of environmental conditions on public health. These spatial data have many advantages related to coverage, resolution, and time scale. They offer an alternative to other environmental measures, such as monitoring station data, which is important in areas where other measures are spatially or temporally scarce or unreliable. They have also increased the feasibility of conducting these analyses in remote areas—both domestically and abroad. While there are many advantages, health economists interested in using spatial data should also be aware of the challenges of working with these types of data; often additional training or interdisciplinary collaboration is needed to ensure the accuracy of their use.

Q4: What are some of the most pressing challenges health economists face in conducting climate-related research?

Dr. Deryugina: I think we’re a little stuck in looking at the health consequences of temperatures when there is so much more. An important one is the disease environment. As areas get warmer, various diseases will spread further from the equator. Unfortunately, the effects of such slow-moving changes are hard to pin down using the typical economics tools. However, we can be looking at places where these diseases currently exist, finding ways to study their health consequences there, and then extrapolating to areas that may get affected further in the future.

Dr. Garg: I think the key challenge and opportunity is measurement. Improving measurement both of environmental factors that affect health and health outcomes will greatly improve research in the climate-health space. This may seem obvious, but when I review papers, it’s usually measurement issues that prevent a paper from being “at the next level”. I think we’ve made some incredible advances in identification strategies and improvements in measurement are the next important frontier.

Dr. Gibson: From a normative perspective, I am most concerned about impacts in low-income countries. In those settings data may be expensive to collect. Underlying structural parameters may be changing relatively rapidly. Research teams may have non-trivial greenhouse gas footprints. Both policymakers and participants in experiments may understandably be more concerned with problems other than climate change. Conducting useful research in a respectful manner is not easy.

Dr. Pakhtigian: One challenge relates to the interdisciplinarity of studying the intersection of environment and health. Health economists are well equipped to conduct empirical analyses of the impacts of various climate-related phenomena on health yet understanding and communicating the mechanisms underlying these relationships may require expertise in other fields. Another challenge relates to the uncertainty inherent in climate projections. While empirical analyses examining the linkages between environmental conditions and health outcomes provide necessary insights to evaluate the impacts of climate change and motivate policy response, the generalizability of environment-health relationships to other contexts remains in question.

Dr. Paul: Research always comes with a host of challenges and unknowns, especially when dealing with something as complex as climate change. One of the biggest unknowns in this area is to what degree some of the technological advances to reduce emissions and pollution—such as carbon capture—may actually be scalable. Another challenge is that humans have simply never inhabited an earth as warm as it is predicted to become. There could be many health challenges associated with global warming that have yet to be uncovered by researchers.

Q5: What can the economics profession (i.e. academic departments, associations, journals, conferences) do to shed the spotlight on and adapt to the challenges of climate change? 

Dr. Deryugina: Bringing together researchers from different disciplines would be one. Many people in purely medical fields are thinking about the health consequences of climate change. Their medical knowledge can help health economists figure out where to look for likely health consequences of climate change, while the economic tools used by health economists can help ensure that the results are as accurate as possible. Special issues and conferences directed at climate change and health can highlight the most important findings today as well as to attract and encourage new researchers to work in this area.

Dr. Garg: My limited view is that discussions on climate change tend to be limited to conferences with environmental economists. I would like to see health economics associations create more opportunities for collaborations with environmental economists. We have a growing body of evidence that environmental change is fundamental to health and although we see plenty of overlap in the areas of air and water pollution, I have seen much less cross-engagement on the topic of climate change.

Dr. Gibson: By educating our students about the economic view of climate change, we influence both their preferences and beliefs, which in turn affects their decisions over personal emissions and government policy (voting, donations). My students are surprised to learn that some estimates put the social cost of carbon (SCC) at $86 (social cost per ton, CO2 equivalent) for India alone (Ricke et al., 2018).In my experience, economists sometimes treat small numbers as zeroes, or assume without evidence that elasticities are such that individual choices don’t change emissions. I emphasize instead that even at a roughly $50 SCC, individual emissions choices by wealthy people are not ignorable: consider a round-trip trans-continental or trans-oceanic flight, which typically results in more than a ton of greenhouse gas emissions. Economists are also well-positioned to inform policy at their institutions. Williams College is currently planning decarbonization of its heating and cooling, and reductions in travel-related greenhouse gas emissions. While policy design rightly involves non-economic views, economic models of behavior can offer useful guidance, e.g., choosing an appropriate emissions price when leakage is a concern.

Dr. Marcus: Climate change presents a global challenge with complexities that require the input of numerous disciplines. Economists can work closely with researchers in the natural, social, computational, and engineering sciences to contribute expertise and tackle this inherently interdisciplinary challenge.

Dr. Pakhtigian: There are a number of ways that the economics profession can shed light on climate change—especially on environmental health—as a priority. First, professional associations and journals can promote climate research through special issues, keynote addresses, and conference organizations. Second, departments can promote and support interdisciplinary work. Given the range of expertise needed to examine and respond to the challenges of climate change, interdisciplinary collaborations are critical to moving the knowledge base forward. Third, given that economists are well positioned to examine climate change impacts and evaluate policies designed to address and combat its most detrimental consequences, the economics profession could conduct and promote research outputs designed for policy and public audiences. 

Dr. Paul: There’s much work to be done. To start, the profession should work to direct and publish much more research in the climate space. One need only page through the “top” journals of the profession to see how little attention the climate question has received. Further, the profession should follow suit of other disciplines and start creating more tenure track lines for economists focusing on pressing climate questions. There is no shortage of work to be done, but there is a shortage of support for this type of work in the discipline, and that’s something we have the power to change.


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