Economic impacts of climate change: an empirical stock-flow consistent model for Viet Nam

With a long coastal line and abundant geological and natural diversity, Viet Nam is one of the most vulnerable countries to climate change in the Asia-Pacific region. The Vietnamese government is putting climate change and sustainable development at the heart of its development policy. An assessment of climate change impacts is crucial for policy planning at the macroeconomic level. Existing literature has mainly focused on specific sectors or specific regions. Sectoral impacts of climate change only give a partial view of potential impacts if cross-sectoral effects and feedback loops on the aggregate macroeconomic variables are not accounted for. In this chapter, we use an empirical stock-flow consistent model of the Vietnamese economy to analyse the economy-wide impacts of climate change by integrating various damage functions, which represent the loss in agriculture production, energy sector, total factor productivity, labour productivity and human mortality due to temperature change.