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A General Equilibrium Analysis of Climate Change Impacts on Tourism

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  • Andrea Bigano

    (Abdus Salam International Centre for Theoretical Physics, Fondazione Eni Enrico Mattei and Centre for Economic Studies, Katholieke Universiteit Leuven)

  • Maria Berrittella

    (Abdus Salam International Centre for Theoretical Physics, "La Sapienza" University and University of York)

  • Roberto Roson

    (Fondazione Eni Enrico Mattei and Università Ca’ Foscari di Venezia)

  • Richard S.J. Tol

    (Centre for Marine and Climate Research, Hamburg University, Institute for Environmental Studies, Vrije Universiteit, and Center for Integrated Study of the Human Dimensions of Global Change, Carnegie Mellon University)

Abstract

This paper studies the economic implications of climate-change-induced variations in tourism demand, using a world CGE model. The model is first re-calibrated at some future years, obtaining hypothetical benchmark equilibria, which are subsequently perturbed by shocks, simulating the effects of climate change. We portray the impact of climate change on tourism by means of two sets of shocks, occurring simultaneously. The first shocks translate predicted variations in tourist flows into changes of consumption preferences for domestically produced goods. The second shocks reallocate income across world regions, simulating the effect of higher or lower tourists’ expenditure. Our analysis highlights that variations in tourist flows will affect regional economies in a way that is directly related to the sign and magnitude of flow variations. At a global scale, climate change will ultimately lead to a welfare loss, unevenly spread across regions.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.127.

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Date of creation: Oct 2004
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Handle: RePEc:fem:femwpa:2004.127

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Keywords: Climate change; Computable general equilibrium models; Tourism;

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  1. Burniaux, Jean-Marc & Truong Truong, 2002. "GTAP-E: An Energy-Environmental Version of the GTAP Model," GTAP Technical Papers 923, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  2. Oliver Deke & Kurt Georg Hooss & Christiane Kasten & Gernot Klepper & Katrin Springer, 2001. "Economic Impact of Climate Change: Simulations with a Regionalized Climate-Economy Model," Kiel Working Papers 1065, Kiel Institute for the World Economy.
  3. Francesco Bosello & Roberto Roson & Richard S.J. Tol, 2004. "Economy-Wide Estimates Of The Implications Of Climate Change: Human Health," Working Papers FNU-57, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2004.
  4. McKibbin, W.J. & Wilcoxen, P.J., 1995. "The Theoretical and Empirical Structure of the G-Cubed Model," Papers 118, Brookings Institution - Working Papers.
  5. Francesco Bosello & Roberto Roson & Richard Tol, 2007. "Economy-wide Estimates of the Implications of Climate Change: Sea Level Rise," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(3), pages 549-571, July.
  6. Jacqueline M. Hamilton, 2004. "Climate and the Destination Choice of German Tourists," Working Papers 2004.21, Fondazione Eni Enrico Mattei.
  7. Tol, Richard S. J., 1996. "The damage costs of climate change towards a dynamic representation," Ecological Economics, Elsevier, vol. 19(1), pages 67-90, October.
  8. Hanslow, Kevin, 2000. "A General Welfare Decomposition for CGE Models," GTAP Technical Papers 498, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  9. Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change. Part 1: Benchmark Estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(1), pages 47-73, January.
  10. Huff, Karen & Thomas W. Hertel, 2001. "Decomposing Welfare Changes in GTAP," GTAP Technical Papers 308, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  11. Jacqueline M. Hamilton & David J. Maddison & Richard S.J. Tol, 2004. "The Effects Of Climate Change On International Tourism," Working Papers FNU-36, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2004.
  12. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
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