Exchange Rates And Climate Change: An Application Of Fund
AbstractAs economic and emissions scenarios assume convergence of per capita incomes, they are sensitivity to the exchange rate used for international comparison. Particularly, developing countries grow slower with a purchasing power exchange rate than with a market exchange rate. Different exchange rates may lead to scenarios with very different per capita income. However, these scenarios also assume convergence of energy intensities, which at least partly offsets the income effect, so that scenarios with different exchange rates would differ less in greenhouse gas emissions. Differences become smaller still if atmospheric concentrations and global warming is considered. However, differences become larger again if one considers the costs of meeting a certain stabilisation target, as the gap between baseline and target is more sensitive to the exchange rate used than the baseline itself. Differences also grow larger if one looks at climate change impacts, which are determined not just by climate change but also by development. The sensitivity to the exchange rate is purely due to imperfect data, imperfect statistical analysis of data, a crude spatial resolution, and imperfect models.
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Bibliographic InfoPaper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-45.
Length: 28 pages
Date of creation: Jun 2004
Date of revision: Jun 2004
Publication status: Published, Climatic Change, 75, 59-80
Climate change; emissions scenarios; purchasing power parity; market exchange rate;
Find related papers by JEL classification:
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
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