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Balancing climate policies and economic development in the Mediterranean countries

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  • Castellini, Marta
  • Castelli, Chiara
  • Gusperti, Camilla
  • Lupi, Veronica
  • Vergalli, Sergio

Abstract

The goal of this work is to improve the spatial representation of the Regional Dynamic Integrated model of Climate and the Economy (RICE), focusing on the Mediterranean countries, as this area is considered as an hot-spot for climate change. The model is updated with a 2015 base year calibration, providing projections till the end of the century We evaluate the impact of climate damages and temperature changes in several scenarios, drawing comparisons across regions. Due to the analytical structure of the model, which considers energy as an explicit input factor, we examine macroeconomic and energy indicators across regions. We find that limiting temperature increase up to 2 °C with respect to pre-industrial levels requires a carbon tax/social cost of carbon of more than USD 200/tC by 2055, doubling by the end of this century, with countries belonging to lower-income regions and those in the southern part of the Mediterranean facing the most severe consequences in terms of economic losses. Our results are embedded in a framework showing the costs of delaying the energy transition. Our figures rely on fossil-fuel inputs for energy production and exogenous technological change.

Suggested Citation

  • Castellini, Marta & Castelli, Chiara & Gusperti, Camilla & Lupi, Veronica & Vergalli, Sergio, 2025. "Balancing climate policies and economic development in the Mediterranean countries," Energy Economics, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:eneeco:v:145:y:2025:i:c:s0140988325002762
    DOI: 10.1016/j.eneco.2025.108452
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    References listed on IDEAS

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    1. Richard S.J. Tol, 2011. "The Social Cost of Carbon," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 419-443, October.
    2. Richard S.J. Tol, 2020. "Optimal climate policy," Video Library 2083, Department of Economics, University of Sussex Business School.
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    More about this item

    Keywords

    IAMs; Climate change; Social cost of carbon; Emissions; Temperature; Energy; Mediterranean region; Mediterranean countries;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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