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The implications of climate change on Germany s foreign trade: A global analysis of heat-related labour productivity losses

Author

Listed:
  • Nina Knittel

    (University of Graz, Austria)

  • Martin W. Jury

    (University of Graz, Austria)

  • Birgit Bednar-Friedl

    (University of Graz, Austria)

  • Gabriel Bachner

    (University of Graz, Austria)

  • Andrea Steiner

    (University of Graz, Austria)

Abstract

We investigate climate change impacts transferred via foreign trade to Germany, a country which is heavily engaged in international trade. Specifically, we look at temperature changes and the associated labour productivity losses at a global scale until 2050. We assess the effects on Germany s imports and exports by means of a global Computable General Equilibrium (CGE) model. To address uncertainty, we account for two Shared Socioeconomic Pathways (SSP2 and SSP3) and two Representative Concentration Pathways (RCP4.5 and RCP8.5) using projections from five global climate models. We find that average annual labour productivity for high intensity work declines by up to 31% (38% with the higher emission scenario) in South-East Asia and the Middle East by 2050 (relative to a 2050 baseline without climate change). As a consequence, Germany s imports from regions outside Europe are lower by up to 2.4%, while imports from within Europe partly compensate this reduction. Also Germany s exports to regions outside Europe are lower but total exports increase slightly due to higher exports to EU regions. Germany s GDP and welfare, however, are negatively affected with a loss of up to -0.41% and -0.46%, respectively. The results highlight that overall positive trade effects for Germany constitute a comparative improvement rather than an absolute gain with climate change.

Suggested Citation

  • Nina Knittel & Martin W. Jury & Birgit Bednar-Friedl & Gabriel Bachner & Andrea Steiner, 2018. "The implications of climate change on Germany s foreign trade: A global analysis of heat-related labour productivity losses," Graz Economics Papers 2018-20, University of Graz, Department of Economics.
  • Handle: RePEc:grz:wpaper:2018-20
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    Cited by:

    1. Osberghaus, Daniel, 2019. "The effects of natural disasters and weather variations on international trade: A review of the empirical literature," ZEW Discussion Papers 19-002, ZEW - Leibniz Centre for European Economic Research.
    2. Daniel Osberghaus, 2019. "The Effects of Natural Disasters and Weather Variations on International Trade and Financial Flows: a Review of the Empirical Literature," Economics of Disasters and Climate Change, Springer, vol. 3(3), pages 305-325, October.

    More about this item

    Keywords

    Heat stress; Climate change; Labour productivity shocks; International trade; Computable general equilibrium; Germany;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • F18 - International Economics - - Trade - - - Trade and Environment

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