Abstract
We develop a unifying approach to estimating climate impacts and adaptation, and apply it to study the impact of climate change on local air pollution. Economic agents are usually constrained when responding to daily weather shocks, but may adjust to long-run climatic changes. By simultaneously exploiting variation in weather and climate, we identify both the short- and long-run impacts on economic outcomes, and measure adaptation directly as the difference between those responses. As a result, we identify adaptation without making extrapolations of weather responses over time or space, and overcome omitted variable bias concerns in prior approaches. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
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