This blog post builds on my last post on a related topic.      My critics say to me;  "Matt, our centers of productivity are located in coastal places and these places face ever increasing climate risks.  In a Paul Krugman  style "History versus Expectations" economy, we have built our productive hubs in places that are now under siege and our economy could be wiped out by future punches."  Note that these persistence pessimists downplay the role of Expectations.  Lucas lives on.  Capital is finite lived and there is always a new generation of young people.  They don't need to follow the herd and sink as the seas rise.  

My counter-points takes several forms;

First, I can point to my 2017 JUE paper on Chinese Industrial Parks.

The point of this blog post is to explore how to use the Rosen/Roback spatial compensating differentials model to evaluate the challenge of climate change adaptation.  In the original Rosen/Roback model, tied local public goods were exogenously determined, common knowledge, and not changing over time.  In English, San Francisco has great summer weather and Detroit does not and everyone knows this.  The final assumption in the model is that people face zero migration costs.

I have been to India once.  In this note, I would like to sketch out a research agenda on the microeconomics of urban slum dweller adaptation to emerging climate risk.  My points will only zero in on India's specifics a couple of times.  There are many slums throughout the developing world.  I will only focus on the challenge of extreme heat exposure.

My starting point is Robert Townsend's 1994 Econometrica paper.

With the upcoming publication of my 2021 Yale Press book Adapting to Climate Change,  I am making plans to follow the advice of Esther Duflo and Al Roth and try to be both a plumber and a market maker.  

I have created the new firm Climate Economics  to set up a vehicle to help me work with specific firms and entities that face their own unique adaptation challenges.
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