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Assessing Macro-economic Effects of Climate Impacts on Energy Demand in EU Sub-national Regions

Author

Listed:
  • Gabriele Standardi

    (CMCC@Ca’Foscari Centro Euro-Mediterraneo Sui Cambiamenti Climatici Università Cà Foscari
    RFF-CMCC European Institute on Economics and the Environment (EIEE))

  • Shouro Dasgupta

    (CMCC@Ca’Foscari Centro Euro-Mediterraneo Sui Cambiamenti Climatici Università Cà Foscari
    RFF-CMCC European Institute on Economics and the Environment (EIEE)
    London School of Economics and Political Science (LSE))

  • Ramiro Parrado

    (CMCC@Ca’Foscari Centro Euro-Mediterraneo Sui Cambiamenti Climatici Università Cà Foscari
    RFF-CMCC European Institute on Economics and the Environment (EIEE))

  • Enrica Cian

    (CMCC@Ca’Foscari Centro Euro-Mediterraneo Sui Cambiamenti Climatici Università Cà Foscari
    RFF-CMCC European Institute on Economics and the Environment (EIEE)
    Ca’ Foscari University of Venice)

  • Francesco Bosello

    (CMCC@Ca’Foscari Centro Euro-Mediterraneo Sui Cambiamenti Climatici Università Cà Foscari
    RFF-CMCC European Institute on Economics and the Environment (EIEE)
    Ca’ Foscari University of Venice)

Abstract

European policy makers are increasingly interested in higher spatial representations of future macro-economic consequences from climate-induced shifts in the energy demand. Indeed, EU sub-national level analyses are currently missing in the literature. In this paper, we conduct a macro-economic assessment of the climate change impacts on energy demand at the EU sub-national level by considering twelve types of energy demand impacts, which refer to three carriers (petroleum, gas, and electricity) and four sectors (agriculture, industry, services, and residential). These impacts have been estimated using climatic data at a high spatial resolution across nine Shared Socioeconomic Pathway (SSP) and Representative Concentration Pathway (RCP) combinations. The impacts feed into a Computable General Equilibrium model, whose regional coverage has been extended to the sub-national NUTS2 and NUTS1 level. Results show that negative macroeconomic effects are not negligible in regions located in Southern Europe mainly driven by increased energy demand for cooling. By 2070, we find negative effects larger than 1% of GDP, especially in SSP5-RCP8.5 and SSP3-RCP4.5 with a maximum of − 7.5% in Cyprus. Regarding regional differences, we identify economic patterns of winners and losers between Northern and Southern Europe. Contrasting scenario combinations, we find that mitigation reduces adverse macro-economic effects for Europe up to a factor of ten in 2070, from 0.4% GDP loss in SSP5-RCP8.5 to 0.04% in SSP2-RCP2.6.

Suggested Citation

  • Gabriele Standardi & Shouro Dasgupta & Ramiro Parrado & Enrica Cian & Francesco Bosello, 2023. "Assessing Macro-economic Effects of Climate Impacts on Energy Demand in EU Sub-national Regions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(1), pages 173-201, October.
    • Handle: RePEc:kap:enreec:v:86:y:2023:i:1:d:10.1007_s10640-023-00792-4
    DOI: 10.1007/s10640-023-00792-4
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