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Growth and adaptation to climate change in the long run

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  • Simon Dietz
  • Bruno Lanz

Abstract

As the climate is changing, the global economy is adapting. We provide a novel method of estimating how much and how much it has cost, based on a structurally estimated, global model of long-run growth. Agriculture is key because it is vulnerable to climate change and food cannot be perfectly substituted. Structural change out of agriculture has been slowed by climate change because more resources have compensated for declining yields. The model can also estimate optimal future carbon taxation. Adaptation is costly, so large emissions cuts could improve welfare substantially. Uncertainty about climate damages in agriculture strongly affects optimal policy.

Suggested Citation

  • Simon Dietz & Bruno Lanz, 2019. "Growth and adaptation to climate change in the long run," IRENE Working Papers 19-09, IRENE Institute of Economic Research.
  • Handle: RePEc:irn:wpaper:19-09
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    1. David Hémous & Morten Olsen, 2021. "Directed Technical Change in Labor and Environmental Economics," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 571-597, August.

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    More about this item

    Keywords

    agriculture; climate change; directed technical change; economic growth; energy; population growth; structural change; structural estimation; uncertainty;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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