The Value of Forests: Impacts on Extreme Heat and Electricity Demand
Type
conference paper
Date Issued
2026-06-01
Author(s)
Ramelli, Stefano
;
Rizzi, Claudio
;
Xu, Simon
Abstract
Global deforestation threatens climate stability, biodiversity, and economic activity,
yet the economic value of forests remains poorly understood. We provide causal
evidence that forests generate significant economic benefits by offering natural
protection against extreme heat. Exploiting variation in prevailing wind patterns
and spatial heterogeneity in U.S. forest cover from 1985 to 2023, we show that
forests reduce both local and downwind temperatures. We then document that
these cooling effects translate into economically meaningful reductions in electricity
demand, particularly during summer months. Finally, we discuss the implications
of these findings in the context of rapidly growing energy demand from data
centers. Our results highlight that forests function as a natural hedge against
extreme heat, with measurable economic impacts on energy demand.
yet the economic value of forests remains poorly understood. We provide causal
evidence that forests generate significant economic benefits by offering natural
protection against extreme heat. Exploiting variation in prevailing wind patterns
and spatial heterogeneity in U.S. forest cover from 1985 to 2023, we show that
forests reduce both local and downwind temperatures. We then document that
these cooling effects translate into economically meaningful reductions in electricity
demand, particularly during summer months. Finally, we discuss the implications
of these findings in the context of rapidly growing energy demand from data
centers. Our results highlight that forests function as a natural hedge against
extreme heat, with measurable economic impacts on energy demand.
Language
English (United States)
HSG Classification
contribution to scientific community
Refereed
No
Subject(s)
Division(s)
File(s)![Thumbnail Image]()
Name
TheValueOfForests_RamelliRizziXu_DraftMay2026.pdf
Size
6.23 MB
Format
Adobe PDF
Checksum (MD5)
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