North American Regional Dynamics in a 21 st Century of Climate Change Mark Partridge

1. North American Regional Dynamics in a 21st Century of Climate Change Mark Partridge Swank Professor in Rural-Urban Policy Ohio State University Presented atPlenary Session Regional Studies Association Annual International Conference Pécs, Hungary 25 May, 2010___________ www.aede.osu.edu/programs/Swank/

2. Outline: • American migration is not a simple story of moving to big cities. • They move to nice places—good weather, pleasant landscape, oceans…. • QOL is a key theme—matters for climate change • Globalization magnifies competitive advantage. • My capstone focus. Climate change will alter the ‘landscape’ & affect migration patterns. Ask: are we on the cusp of profound change? This is a key role for Regional Studies.

3. Why Study Migration? • In North America, net migration is the key reason for growth differentials. • Migration is regional success? People vote with their feet to maximize utility? • Because high income may be a regional compensating differential, it is not the correct metric of regional well being. • E.g., Fort McMurray in the Oil Sands of Canada

4. Amenities—Conceptual Issues • “Household” amenities shift labor supply and/or household preferences. • Natural amenities: climate, water, landscape, mountains, clean environment. My focus today. • Philip Graves in the 1970s and 1980s with major recent contributions by Jordan Rappaport and others. • Urban amenities such as cultural venues, recreation, urban milieu. (Glaeser et al., 2001; Adamson et al., 2004; Florida, 2004)

5. Conceptual Issues—cont. • Amenities are normal goods→ rising incomes over time increase the demand for amenities. • Technological change leads to movement to warm locations such as air conditioning • Amenities lead to faster population growth & are capitalized into higher housing costs and lower wages as people crowd into high-amenity areas • Eventually, high prices and low wages would shut off amenity migration. Perhaps after 2010….. • Michael Storper and Allen J. Scott dispute the notion of Amenity led growth though they provide no empirical evidence (2009, J. of Economic Geography)

6. What about cities • Urban agglomeration is clearly a strong force. Either for the largest cities or having access to them—especially Europe and Asia. • London, Blue Banana, etc.

7. Evidence • Massive empirical literature starting with Philip Graves in the 1970s. • Some key studies are: • Partridge and Rickman (2003) J. of Urban Economics; • Jordan Rappaport (2007) Regional Science and Urban Economics, • Mario Polese (2009). The Wealth and Poverty of Regions: Why Cities Matter. University of Chicago Press.

8. 1969-2007 Growth By Metro Area Size in 1969 (%)

9. 1990-2007 Growth By Metro Area Size in 1969 (%)

10. 1969-2007 Growth For Representative Metro Type (%)

11. 1990-2007 Growth For Representative Metro Type (%)

12. What did we learn? • Growth shifted from the core to the hinterlands even with conditions that favored concentration such as falling transportation costs. • Agglomeration is not the primary driver of growth. Growth is happening in cities located in nice places, not biggest cities. • What about amenity growth?

13. Population Growth from 1960 to 2008

14. 2000-2007 Population Growth

15. 1990/91-2006 North American Population Growth 15 15

16. What about Canada? • Cities matter more in Canada • When there are few cities, each city takes on added importance. [between Windsor-Montreal • When climate varies less, there is less migration for weather. • Ergo—Canadian regional growth processes have a more European flavor though with a little ‘natural resource’ taste. • Why Regional Studies is so interesting.

17. Globalization • Globalization makes our work even more important. Small gaps in competitiveness or QOL now shift resources around the world. • Not just Cleveland competing with Detroit, but Cleveland competes with the world. Winners “steal” from the rest of the world. Laggards lose to everywhere in the world. • Everything is magnified in a global economy. • Higher incomes and the search for QOL creates a competition for footloose high-skilled workers.

18. Climate Change and Regional Studies • Most important issue facing human kind. • I believe this is where Regional Studies can play an important role that has been so far is understudied and under appreciated by policymakers. • Barca report • Every state and city in the U.S. seems to want to be the green capital of the economic development

19. Climate Change in the U.S. • Climate change is forecasted to greatly raise temperatures, sea levels, pests, and increase the size and frequencies of storms and hurricanes. • Arid areas in the Southwest and elsewhere could experience long droughts, creating water shortages.

20. Sea-Level Rise in the Gulf Coast

21. What happens to our weather? Illinois becomes the Sunbelt.

22. What will Climate Change do to Growth and Migration? • Climate change will mean that infrastructure will have to be realigned or strengthened, raising local taxes in affected areas. • New infrastructure will be required for water projects with higher water prices. • Climate change will make the Sunbelt less hospitable and make the Frostbelt more desirable.

23. What will Climate Change do to Growth and Migration? • Americans will move to high QOL. Movements of people could be into the tens of millions. • Together, coastal areas (especially on the East Coast and Gulf of Mexico) and the Sunbelt should experience out-migration.

24. What will Climate Change do to Growth and Migration? • Very little thought into the consequences of this migration and then how ‘we’ should be involved. • What I do NOT mean about “regions and climate change”: • Most “climate change” regional research has been very local. E.g., what is the local economic impact of a “green energy” cluster?

25. What will Climate Change do to Growth and Migration? • What I do not mean: Plop money here, there, everywhere • Combining environmental policy with job creation programs in order to ‘tick’ 2 boxes. What does US do: • Alternative energy projects that reduce carbon at a higher cost than energy efficiency • Creates few jobs because alternative energy is capital intensive • Need heavy subsidies: borrow funds from China to fund green jobs. • Little job growth and limited positive effects on the environment, while draining the public treasury.

26. What will Climate Change do to Growth and Migration? • What I Do mean: • Climate change is too important to be used as an excuse for ill-conceived jobs programs. • Massive regional realignment—the interactions of regions • On the positive side, such migration will lower the adaptation costs of climate change. • It will revitalize parts of the Rustbelt, Northern Great Plains and Northeast—areas that have faced relative decline for decades.

27. What will Climate Change do to Growth and Migration? • On the negative side, it will lead to massive adjustment costs in adversely affected areas. • Vicious cycle: higher taxes to support new infrastructure will lead to out-migration, creating the need to raise taxes even further, starting the process over again. • The effects of climate change will soon start to be capitalized into property values, beginning the adjustment well before the main negative effects are felt.

28. What is the role of Regional Studies? • Scientists have driven the climate change research and policy agenda. • Worry about sea/lake levels, crop production, forest cover, policies to mitigate climate changes. • Very naïve assumptions about how people may respond, if at all. • “People” are almost an afterthought.

29. What is the role of Regional Studies? • The massive movements of people in response to climate change may have much larger effects than the other policies aimed at adaptation and mitigation such as cap and trade. • Prediction & Planning is essential. • Land-use is important. Are we going to replace Sunbelt sprawl with Rustbelt sprawl? • Prime farmland would have a higher premium—further calling for planning for better land-use. • Needs for new infrastructure and water use?

30. What is the role of Regional Studies? • Regional Studies is ceding too much ground to scientists who do not understand the role of how people respond to incentives. • Regional studies is ceding too much ground to (say) environmental economists who do not take into account migration.

31. Summary • Americans have moved en masse to nice places not necessarily big cities. • Globalization makes regional competition even more acute with the effects of winning or losing even more magnified. • Climate change will alter the American landscape with the potential to reshape regional patterns. • Regional Studies is needed to help with these paramount issues.

32. Thank you Presentation will be posted at The Ohio State University, AED Economics, Swank Program website: http://aede.osu.edu/programs/Swank/ (under presentations) 32 32

33. 1950-2000 Population Growth 33

34. Population Growth from 1950-2000

35. 2000-2007 Population Growth in NC U.S.