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Climate Change and Extreme Events: An Assessment of Economic

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  • Calzadilla, Alvaro
  • Pauli, Francesco
  • Roson, Roberto

Abstract

We use a general equilibrium model of the world economy, and a regional economic growth model, to assess the economic implications of vulnerability from extreme meteorological events, induced by the climate change. In particular, we first consider the impact of climate change on ENSO and NAO oceanic oscillations and, subsequently, the implied variation on regional expected damages. We found that expected damages from extreme events are increasing in the United States, Europe and Russia, and Russia, and decreasing in energy exporting countries. Two economic implications are taken into account: (1) short-term impacts, due to changes in the demand structure, generated by higher/lower precautionary saving, and (2) variations in regional economic growth paths. We found that indirect short-term effects (variations in savings due to higher or lower likelihood of natural disasters) can have an impact on regional economics, whose order of magnitude is comparable to the one of direct damages. On the other hand, we highlight that higher vulnerability from extreme events translates into higher volatility in the economic growth path, and vice versa.

Suggested Citation

  • Calzadilla, Alvaro & Pauli, Francesco & Roson, Roberto, 2006. "Climate Change and Extreme Events: An Assessment of Economic," Climate Change Modelling and Policy Working Papers 12055, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcc:12055
    DOI: 10.22004/ag.econ.12055
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    References listed on IDEAS

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    1. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    2. Bosello, Francesco & Roson, Roberto & Tol, Richard S.J., 2006. "Economy-wide estimates of the implications of climate change: Human health," Ecological Economics, Elsevier, vol. 58(3), pages 579-591, June.
    3. Francesco Bosello & Roberto Roson & Richard Tol, 2007. "Economy-wide Estimates of the Implications of Climate Change: Sea Level Rise," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(3), pages 549-571, July.
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    Cited by:

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    2. Matthew Ranson & Lisa Tarquinio & Audrey Lew, 2016. "Modeling the Impact of Climate Change on Extreme Weather Losses," NCEE Working Paper Series 201602, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2016.
    3. Naeem Akram* & Asma Gulzar**, 2013. "Climate change and economic growth : An empirical analysis of Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 23(1), pages 31-54.
    4. Naeem Akram & Abdul Hamid, 2015. "Climate change: A threat to the economic growth of Pakistan," Progress in Development Studies, , vol. 15(1), pages 73-86, January.

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