For many years, economists have mainly treated climate change as a future problem, focusing on how it might affect incomes and growth decades from now. New research by economist Derek Lemoine challenges that assumption by showing that the economic damage is already happening. His study finds that climate change has reduced average income in the United States by around 12 per cent. In other words, the country is already paying a significant economic price for a warmer climate, not at some distant point in the future, but right now.

Lemoine argues that understanding today’s costs is crucial for both policymakers and businesses. If researchers struggle to measure what climate change is already costing the economy using existing data, then forecasts about future impacts become highly uncertain. His findings suggest that the economic consequences of climate change are comparable in size to those caused by major national policy changes. While the precise figure is open to debate, he stresses that the actual impact is clearly far greater than earlier estimates suggested.

Previous studies tended to look only at short-term, local weather changes, such as a hotter summer or a colder winter in a specific place. Using this approach, climate change appeared to reduce income by less than 1%. Lemoine’s work takes a broader view. By accounting for the fact that climate change persists year after year, affects the entire country at once, and links regions through trade and prices, the estimated income loss rises sharply. When many areas experience temperature changes simultaneously, the economic effects spread through supply chains and markets, adding up far more quickly than local studies capture.

To measure this nationwide impact, Lemoine used climate models that compare the real world with a hypothetical world without human-caused emissions. This allowed him to estimate how the weather in each county would have differed in the absence of climate change. He then combined this information with decades of county-level data on daily temperatures and personal income, spanning 1969 to 2019. This approach enabled tracking how income responded not only to local temperature changes but also to temperature shifts elsewhere in the country.

Importantly, the study does not focus on dramatic events such as hurricanes, floods, or wildfires. Instead, it looks at routine changes, such as having more hot days and fewer cold days. These everyday shifts matter because they influence productivity, energy use, prices, and trade patterns across regions. A hotter climate in one state can affect incomes in another through higher costs or disrupted supply chains, showing how closely connected the national economy really is.

Seeing climate change as an ongoing economic force rather than a distant threat has practical consequences. For businesses, it highlights the need for resilience planning, from where to locate operations to how to manage insurance and energy costs. For governments, regularly tracking the economic cost of climate change, much as they do employment or inflation, could lead to better-targeted policies. By understanding where losses are already occurring, decision-makers can respond more effectively to the risks that climate change is creating today, not just those expected in the future.

More information: Derek Lemoine, Climate change has already made the United States poorer, Proceedings of the National Academy of Sciences. DOI: 10.1073/pnas.2504376122

Journal information: Proceedings of the National Academy of Sciences Provided by University of Arizona