IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-02505088.html
   My bibliography  Save this paper

Long-term growth impact of climate change and policies: the Advanced Climate Change Long-term (ACCL) scenario building model

Author

Listed:
  • Claire Alestra

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Gilbert Cette

    (Centre de recherche de la Banque de France - Banque de France, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Valérie Chouard

    (Centre de recherche de la Banque de France - Banque de France)

  • Rémy Lecat

    (Centre de recherche de la Banque de France - Banque de France)

Abstract

This paper provides a tool to build climate change scenarios to forecast Gross Domestic Product (GDP), modelling both GDP damage due to climate change and the GDP impact of mitigating measures. It adopts a supply-side, long-term view, with 2060 and 2100 horizons. It is a global projection tool (30 countries / regions), with assumptions and results both at the world and the country / regional level. Five different types of energy inputs are taken into account according to their CO2 emission factors. Full calibration is possible at each stage, with estimated or literature-based default parameters. In particular, Total Factor Productivity (TFP), which is a major source of uncertainty on future growth and hence on CO2 emissions, is endogenously determined, with a rich modeling encompassing energy prices, investment prices, education, structural reforms and decreasing return to the employment rate. We present four scenarios: Business As Usual (BAU), with stable energy prices relative to GDP price; Decrease of Renewable Energy relative Price (DREP), with the relative price of non CO2 emitting electricity decreasing by 2% a year; Low Carbon Tax (LCT) scenario with CO2 emitting energy relative prices increasing by 1% per year; High Carbon Tax (HCT) scenario with CO2 emitting energy relative prices increasing by 3% per year. At the 2100 horizon, global GDP incurs a loss of 12% in the BAU, 10% in the DREP, 8% in the Low Carbon Tax scenario and 7% in the High Carbon Tax scenario. This scenario exercise illustrates both the "tragedy of the horizon", as gains from avoided climate change damage net of damage from mitigating policies are negative in the medium-term and positive in the long-term, and the "tragedy of the commons", as climate change damage is widely dispersed and particularly severe in developing economies, while mitigating policies should be implemented in all countries, especially in advanced countries modestly affected by climate change but with large CO2 emission contributions.

Suggested Citation

  • Claire Alestra & Gilbert Cette & Valérie Chouard & Rémy Lecat, 2020. "Long-term growth impact of climate change and policies: the Advanced Climate Change Long-term (ACCL) scenario building model," Working Papers halshs-02505088, HAL.
  • Handle: RePEc:hal:wpaper:halshs-02505088
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02505088
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-02505088/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2018. "Rent creation and sharing: new measures and impacts on TFP," Working papers 674, Banque de France.
    2. Solomon Hsiang & Robert E. Kopp, 2018. "An Economist's Guide to Climate Change Science," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 3-32, Fall.
    3. Tol, Richard S.J., 2005. "Emission abatement versus development as strategies to reduce vulnerability to climate change: an application of FUND," Environment and Development Economics, Cambridge University Press, vol. 10(5), pages 615-629, October.
    4. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
    5. Waldhoff, Stephanie & Anthoff, David & Rose, Steven K. & Tol, Richard S. J., 2014. "The marginal damage costs of different greenhouse gases: An application of FUND," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-33.
    6. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    7. Gilbert Cette & Rémy Lecat & Carole Ly-Marin, 2017. "Long-term growth and productivity projections in advanced countries," OECD Journal: Economic Studies, OECD Publishing, vol. 2016(1), pages 71-90.
    8. Bourles, Renaud & Cette, Gilbert, 2007. "Trends in "structural" productivity levels in the major industrialized countries," Economics Letters, Elsevier, vol. 95(1), pages 151-156, April.
    9. David M. Byrne & John G. Fernald & Marshall B. Reinsdorf, 2016. "Does the United States Have a Productivity Slowdown or a Measurement Problem?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 109-182.
    10. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2018. "The role of production factor quality and technology diffusion in twentieth-century productivity growth," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 12(1), pages 61-97, January.
    11. Zsuzsanna Csereklyei, M. d. Mar Rubio-Varas, and David I. Stern, 2016. "Energy and Economic Growth: The Stylized Facts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    12. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    13. William Nordhaus, 2018. "Projections and Uncertainties about Climate Change in an Era of Minimal Climate Policies," American Economic Journal: Economic Policy, American Economic Association, vol. 10(3), pages 333-360, August.
    14. William Nordhaus, 2019. "Climate Change: The Ultimate Challenge for Economics," American Economic Review, American Economic Association, vol. 109(6), pages 1991-2014, June.
    15. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2016. "Productivity Trends in Advanced Countries between 1890 and 2012," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 420-444, September.
    16. Andries Brandsma & d'Artis Kancs & Philippe Monfort & Alexandra Rillaers, 2015. "RHOMOLO: A dynamic spatial general equilibrium model for assessing the impact of cohesion policy," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 197-221, November.
    17. Chris Papageorgiou & Marianne Saam & Patrick Schulte, 2017. "Substitution between Clean and Dirty Energy Inputs: A Macroeconomic Perspective," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 281-290, May.
    18. William D. Nordhaus & Andrew Moffat, 2017. "A Survey of Global Impacts of Climate Change: Replication, Survey Methods, and a Statistical Analysis," NBER Working Papers 23646, National Bureau of Economic Research, Inc.
    19. Stiglitz, Joseph E., 2019. "Addressing climate change through price and non-price interventions," European Economic Review, Elsevier, vol. 119(C), pages 594-612.
    20. Mikhail Golosov & John Hassler & Per Krusell & Aleh Tsyvinski, 2014. "Optimal Taxes on Fossil Fuel in General Equilibrium," Econometrica, Econometric Society, vol. 82(1), pages 41-88, January.
    21. Paul Conway & Giuseppe Nicoletti, 2007. "Product Market Regulation and Productivity Convergence: OECD Evidence and Implications for Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 15, pages 3-24, Fall.
    22. Robert S. Pindyck, 2017. "The Use and Misuse of Models for Climate Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 100-114.
    23. Nordhaus, William D., 1993. "Rolling the 'DICE': an optimal transition path for controlling greenhouse gases," Resource and Energy Economics, Elsevier, vol. 15(1), pages 27-50, March.
    24. John Weyant, 2017. "Some Contributions of Integrated Assessment Models of Global Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 115-137.
    25. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, November.
    26. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
    27. Bergeaud, A. & Cette, G. & Lecat, R., 2015. "Productivity trends from 1890 to 2012 in advanced countries," Rue de la Banque, Banque de France, issue 07, June..
    28. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2013. "Is the Information Technology Revolution Over?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 20-36, Spring.
    29. Katheline Schubert, 2018. "Macroeconomics and the Environment," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 117-132.
    30. Maximilian Auffhammer, 2018. "Quantifying Economic Damages from Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 33-52, Fall.
    31. William D. Nordhaus, 1992. "Lethal Model 2: The Limits to Growth Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 1-60.
    32. Gilbert Cette & Jimmy Lopez & Jacques Mairesse, 2016. "Market Regulations, Prices, and Productivity," American Economic Review, American Economic Association, vol. 106(5), pages 104-108, May.
    33. Christian Lutz & Bernd Meyer & Marc Ingo Wolter, 2010. "The global multisector/multicountry 3-E model GINFORS. A description of the model and a baseline forecast for global energy demand and CO 2 emissions," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 10(1/2), pages 25-45.
    34. A. Bergeaud & G. Cette & R. Lecat, 2016. "The role of production factor quality and technology diffusion in 20th century productivity growth," Working papers 588, Banque de France.
    35. Marcelo Soto, 2002. "Rediscovering Education in Growth Regressions," OECD Development Centre Working Papers 202, OECD Publishing.
    36. Kenneth Gillingham & James H. Stock, 2018. "The Cost of Reducing Greenhouse Gas Emissions," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 53-72, Fall.
    37. Deke, Oliver & Hooss, Kurt Georg & Kasten, Christiane & Klepper, Gernot & Springer, Katrin, 2001. "Economic impact of climate change: simulations with a regionalized climate-economy model," Kiel Working Papers 1065, Kiel Institute for the World Economy (IfW Kiel).
    38. repec:aei:rpaper:37301 is not listed on IDEAS
    39. Christian Gollier and Jean Tirole, 2015. "Negotiating effective institutions against climate change," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joaquín Bernal-Ramírez & Jair Ojeda-Joya & Camila Agudelo-Rivera & Felipe Clavijo-Ramírez & Carolina Durana-Ángel & Clark Granger-Castaño & Daniel Osorio-Rodríguez & Daniel Parra-Amado & José Pulido &, 2022. "Impacto macroeconómico del cambio climático en Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 102, pages 1-62, July.
    2. Alestra, C. & Cette, G. & Chouard, V. & Lecat, R., 2022. "Growth impact of climate change and response policies: The advanced climate change long-term (ACCL) model1," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 96-112.
    3. Claire Alestra & Gilbert Cette & Valérie Chouard & Rémy Lecat, 2024. "How can technology significantly contribute to climate change mitigation?," Applied Economics, Taylor & Francis Journals, vol. 56(41), pages 4925-4937, September.
    4. Jean-Luc Gaffard, 2021. "La transition écologique : incertitude, irréversibilité et modèle institutionnel," GREDEG Working Papers 2021-04, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Feb 2021.
    5. Drudi, Francesco & Moench, Emanuel & Holthausen, Cornelia & Weber, Pierre-François & Ferrucci, Gianluigi & Setzer, Ralph & Adao, Bernardino & Dées, Stéphane & Alogoskoufis, Spyros & Téllez, Mar Delgad, 2021. "Climate change and monetary policy in the euro area," Occasional Paper Series 271, European Central Bank.
    6. Olivier R de Bandt & Luc Jacolin & Thibault Lemaire, 2021. "Climate Change in Developing Countries: Global Warming Effects, Transmission Channels and Adaptation Policies," Working Papers hal-03948704, HAL.
    7. Thomas Allen & Stéphane Dees & Jean Boissinot & Carlos Mateo Caicedo Graciano & Valérie Chouard & Laurent Clerc & Annabelle de Gaye & Antoine Devulder & Sébastien Diot & Noémie Lisack & Fulvio Pegorar, 2020. "Climate-Related Scenarios for Financial Stability Assessment: an Application to France," Working papers 774, Banque de France.
    8. Mongelli, Francesco Paolo & Pointner, Wolfgang & van den End, Jan Willem, 2022. "The effects of climate change on the natural rate of interest: a critical survey," Working Paper Series 2744, European Central Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alestra, C. & Cette, G. & Chouard, V. & Lecat, R., 2022. "Growth impact of climate change and response policies: The advanced climate change long-term (ACCL) model1," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 96-112.
    2. Richard S.J. Tol, 2021. "Estimates of the social cost of carbon have not changed over time," Working Paper Series 0821, Department of Economics, University of Sussex Business School.
    3. Richard S. J. Tol, 2021. "Estimates of the social cost of carbon have increased over time," Papers 2105.03656, arXiv.org, revised Aug 2022.
    4. Claire Alestra & Gilbert Cette & Valérie Chouard & Rémy Lecat, 2024. "How can technology significantly contribute to climate change mitigation?," Applied Economics, Taylor & Francis Journals, vol. 56(41), pages 4925-4937, September.
    5. Tol, Richard S.J., 2024. "A meta-analysis of the total economic impact of climate change," Energy Policy, Elsevier, vol. 185(C).
    6. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    7. Gilbert Cette & Rémy Lecat & Carole Ly-Marin, 2017. "Long-term growth and productivity projections in advanced countries," OECD Journal: Economic Studies, OECD Publishing, vol. 2016(1), pages 71-90.
    8. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2018. "Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model," Ecological Economics, Elsevier, vol. 150(C), pages 315-339.
    9. Gilbert Cette & Aurélien Devillard & Vincenzo Spiezia, 2022. "Growth Factors in Developed Countries: A 1960–2019 Growth Accounting Decomposition," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(2), pages 159-185, June.
    10. repec:hal:spmain:info:hdl:2441/4hs7liq1f49gh9chdf7r17gam6 is not listed on IDEAS
    11. Nelson, Tim & Pascoe, Owen & Calais, Prabpreet & Mitchell, Lily & McNeill, Judith, 2019. "Efficient integration of climate and energy policy in Australia’s National Electricity Market," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 178-193.
    12. Zhang, Hong & Jin, Gui & Zhang, Zhengyu, 2021. "Coupling system of carbon emission and social economy: A review," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    13. Havranek, Tomas & Irsova, Zuzana & Janda, Karel & Zilberman, David, 2015. "Selective reporting and the social cost of carbon," Energy Economics, Elsevier, vol. 51(C), pages 394-406.
    14. DeCanio, Stephen J. & Manski, Charles F. & Sanstad, Alan H., 2022. "Minimax-regret climate policy with deep uncertainty in climate modeling and intergenerational discounting," Ecological Economics, Elsevier, vol. 201(C).
    15. Arbex, Marcelo & Batu, Michael, 2020. "What if people value nature? Climate change and welfare costs," Resource and Energy Economics, Elsevier, vol. 61(C).
    16. Peter von zur Muehlen, 2022. "Prices and Taxes in a Ramsey Climate Policy Model under Heterogeneous Beliefs and Ambiguity," Economies, MDPI, vol. 10(10), pages 1-56, October.
    17. Moritz A. Drupp & Frikk Nesje & Robert C. Schmidt & Robert Christian Schmidt, 2022. "Pricing Carbon," CESifo Working Paper Series 9608, CESifo.
    18. De Bruin, Kelly & Kiran Krishnamurthy, Chandra, 2021. "Optimal Climate Policy with Fat-tailed Uncertainty: What the Models Can Tell Us," Papers WP697, Economic and Social Research Institute (ESRI).
    19. Richard S. J. Tol, 2021. "Selfish Bureaucrats And Policy Heterogeneity In Nordhaus’ Dice," World Scientific Book Chapters, in: Robert Mendelsohn (ed.), CLIMATE CHANGE ECONOMICS Commemoration of Nobel Prize for William Nordhaus, chapter 6, pages 77-92, World Scientific Publishing Co. Pte. Ltd..
    20. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 911-928.
    21. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).

    More about this item

    Keywords

    Climate; Global warming; Energy prices; Government policy; Growth; Productivity; Long- term projections;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-02505088. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.