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Macroeconomic Impact of Climate Damage in France

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  • Florian Jacquetin
  • Gaël Callonnec

Abstract

[eng] In order to assess the economic cost of climate inaction, we introduce the cost of the damage into the “ThreeME” macroeconomic model devised by ADEME (the French Agency for Ecological Transition). The traditional “Keynesian” framework of the model has been modified to take into account the risks weighing on certain sectors (agriculture and electricity) that would lead to pressures causing reductions in their productivity. The damage includes not only chronic risks resulting from gradual changes, but also acute risks resulting from high intensity events of short duration, such as natural disasters. This damage is introduced in a “bottom-up” approach, i.e. at the level of both the supply and the demand of the stakeholders concerned. According to the simulations, compared to an anticipated and planned transition limiting global warming to 1.5°C by 2100, climate inaction could cost France almost 7 points of annual GDP by 2100.

Suggested Citation

  • Florian Jacquetin & Gaël Callonnec, 2024. "Macroeconomic Impact of Climate Damage in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 543, pages 39-64.
    • Handle: RePEc:nse:ecosta:ecostat_2024_543_3
    DOI: https://doi.org/10.24187/ecostat.2024.543.2118
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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
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    Cited by:

    1. Xavier Timbeau, 2024. "Comment – The Lack of Interest in Economics for the Challenge of the Century," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 543, pages 65-74.

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