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Assessing the Economic Impacts of Climate Change. An Updated CGE Point of View

Author

Listed:
  • Francesco Bosello

    (Fondazione Eni Enrico Mattei, University of Milan and Euro-Mediterranean Center for Climate Change)

  • Fabio Eboli

    (Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change)

  • Roberta Pierfederici

    (Fondazione Eni Enrico Mattei and Euro-Mediterranean Center for Climate Change)

Abstract

The present research describes a climate change integrated impact assessment exercise, whose economic evaluation is based on a CGE approach and modeling effort. Input to the CGE model comes from a wide although still partial set of up-to-date bottom-up impact studies. Estimates indicate that a temperature increase of 1.92°C compared to pre-industrial levels in 2050 could lead to global GDP losses of approximately 0.5% compared to a hypothetical scenario where no climate change is assumed to occur. Northern Europe is expected to benefit from the evaluated temperature increase (+0.18%), while Southern and Eastern Europe are expected to suffer from the climate change scenario under analysis (-0.15% and -0.21% respectively). Most vulnerable countries are the less developed regions, such as South Asia, South-East Asia, North Africa and Sub-Saharan Africa. In these regions the most exposed sector is agriculture, and the impact on crop productivity is by far the most important source of damages. It is worth noting that the general equilibrium estimates tend to be lower, in absolute terms, than the bottom-up, partial equilibrium estimates. The difference is to be attributed to the effect of market-driven adaptation. This partly reduces the direct impacts of temperature increases, leading to lower damage estimates. Nonetheless these remain positive and substantive in some regions. Accordingly, market-driven adaptation cannot be the solution to the climate change problem.

Suggested Citation

  • Francesco Bosello & Fabio Eboli & Roberta Pierfederici, 2012. "Assessing the Economic Impacts of Climate Change. An Updated CGE Point of View," Working Papers 2012.02, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2012.02
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    1. Eboli, Fabio & Parrado, Ramiro & Roson, Roberto, 2010. "Climate-change feedback on economic growth: explorations with a dynamic general equilibrium model," Environment and Development Economics, Cambridge University Press, vol. 15(05), pages 515-533, October.
    2. Jacqueline M. Hamilton & Richard S.J. Tol, 2004. "The Impact Of Climate Change On Tourism And Recreation," Working Papers FNU-52, Research unit Sustainability and Global Change, Hamburg University, revised Nov 2004.
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    1. repec:eee:jpolmo:v:39:y:2017:i:6:p:1141-1162 is not listed on IDEAS
    2. Richard S. J. Tol & Robert J. Nicholls & Sally Brown & Jochen Hinkel & Athanasios T. Vafeidis & Tom Spencer & Mark Schuerch, 2016. "Comment on ‘The Global Impacts of Extreme Sea-Level Rise: A Comprehensive Economic Assessment’," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(2), pages 341-344, June.
    3. Roberto Roson & Richard Damania, the World Bank, Washington D.C., 2016. "Simulating the Macroeconomic Impact of Future Water Scarcity," EcoMod2016 9167, EcoMod.
    4. Richard S. J. Tol, 2015. "Economic impacts of climate change," Working Paper Series 7515, Department of Economics, University of Sussex.
    5. Roberto Roson & Richard Damania, 2016. "Simulating the Macroeconomic Impact of Future Water Scarcity: an Assessment of Alternative Scenarios," Working Papers 2016:07, Department of Economics, University of Venice "Ca' Foscari".
    6. Hjort, Ingrid, 2016. "Potential Climate Risks in Financial Markets: A Literature Overview," Memorandum 01/2016, Oslo University, Department of Economics.
    7. T. Chatzivasileiadis & F. Estrada & M. W. Hofkes & R. S. J. Tol, 2017. "Systematic sensitivity analysis of the full economic impacts of sea level rise," Working Paper Series 1617, Department of Economics, University of Sussex.
    8. Mattia Amadio & Jaroslav Mysiak & Lorenzo Carrera & Elco Koks, 2016. "Improving flood damage assessment models in Italy," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 82(3), pages 2075-2088, July.
    9. Theodoros N. Chatzivasileiadis & Marjan W. Hofkes & Onno J. Kuik & Richard S.J. Tol, 2016. "Full economic impacts of sea level rise: loss of productive resources and transport disruptions," Working Paper Series 9916, Department of Economics, University of Sussex.
    10. Rob Dellink & Hyunjeong Hwang & Elisa Lanzi & Jean Chateau, 2017. "International trade consequences of climate change," OECD Trade and Environment Working Papers 2017/1, OECD Publishing.
    11. Valeria Costantini & Giorgia Sforna & Anil Markandya & Elena Paglialunga, 2017. "Impact And Distribution Of Climatic Damages: A Methodological Proposal With A Dynamic Cge Model Applied To Global Climate Negotiations," Departmental Working Papers of Economics - University 'Roma Tre' 0226, Department of Economics - University Roma Tre.
    12. Richard S. J. Tol, 2016. "The Impacts Of Climate Change According To The Ipcc," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-20, February.
    13. Richard Tol, 2015. "Bootstraps for Meta-Analysis with an Application to the Impact of Climate Change," Computational Economics, Springer;Society for Computational Economics, vol. 46(2), pages 287-303, August.
    14. CISCAR MARTINEZ Juan Carlos & FEYEN Luc & SORIA RAMIREZ Antonio & LAVALLE Carlo & PERRY Miles & RAES Frank & NEMRY Francoise & DEMIREL Hande & RÓZSAI Máté & DOSIO Alessandro & DONATELLI Marcello & SRI, 2014. "Climate Impacts in Europe. The JRC PESETA II Project," JRC Working Papers JRC87011, Joint Research Centre (Seville site).
      • Ciscar, Juan-Carlos & Feyen, Luc & Soria, Antonio & Lavalle, Carlo & Raes, Frank & Perry, Miles & Nemry, Françoise & Demirel, Hande & Rozsai, Máté & Dosio, Alessandro & Donatelli, Marcello & Srivastav, 2014. "Climate Impacts in Europe - The JRC PESETA II Project," MPRA Paper 55725, University Library of Munich, Germany.
    15. Anil Markandya, 2017. "State of Knowledge on Climate Change, Water, and Economics," World Bank Other Operational Studies 26491, The World Bank.
    16. Ciscar, Juan-Carlos & Dowling, Paul, 2014. "Integrated assessment of climate impacts and adaptation in the energy sector," Energy Economics, Elsevier, vol. 46(C), pages 531-538.
    17. Bosello, Francesco & De Cian, Enrica, 2014. "Climate change, sea level rise, and coastal disasters. A review of modeling practices," Energy Economics, Elsevier, pages 593-605.
    18. Francesco Bosello & Enrica De Cian & Licia Ferranna, 2015. "Catastrophic Risk, Precautionary Abatement, and Adaptation Transfers," Working Papers 2014.108, Fondazione Eni Enrico Mattei.
    19. Halkos, George, 2014. "The Economics of Climate Change Policy: Critical review and future policy directions," MPRA Paper 56841, University Library of Munich, Germany.
    20. Theodoros N. Chatzivasileiadis & Marjan W. Hofkes & Onno J. Kuik & Richard S.J. Tol, 2016. "Full economic impacts of sea level rise: loss of productive resources and transport disruptions," Working Paper Series 09916, Department of Economics, University of Sussex.
    21. Richard S.J. Tol, 2016. "Dangerous Interference With The Climate System: An Economic Assessment," Working Paper Series 10016, Department of Economics, University of Sussex.

    More about this item

    Keywords

    Computable General Equilibrium Modeling; Impact Assessment; Climate Change;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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