Climate Changes Affect Human Capital

Climate change severely impacts critical facets of human capital across the life cycle. This is particularly alarming as both the frequency and intensity of extreme weather shocks continue to increase, and extremes appear to be the main channel of causality. At the same time, human capital has a vital role in driving effective climate change mitigation and adaptation. While substantial progress has been made in recent years in assessing the economic impacts of climate on economic outcomes, there has been comparatively less advancement in evaluating its effects on human capital. In this paper we provide a framework for analyzing the multiple interlinkages between climate change and human capital. We document the existing evidence on the impacts of climate change damages, and the effects of climate change mitigation and adaptation, on human capital across the life cycle. The framework distinguishes between two channels through which human capital is affected: direct effects on health, nutrition, and wellbeing, and indirect effects through changes in economic systems, markets, and through damage to infrastructure. These two channels call for different policy interventions, focusing on the different stages of the life cycle. For mitigation and adaptation, we find that while these are overall clearly beneficial, they are also associated with significant human capital costs for specific sectors and groups in society. Ignoring these costs can only lead to worse outcomes, as it can lead to diminishing public support for the required mitigation and adaptation responses.