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Evaluating Climate
Change Impacts:
an Integrated Approach
Marco Lazzarin and Francesco Bosello
Trieste, 09/07/03
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Evaluating Climate Change Impacts: an Integrated Approach
GCM
output
Temperature level
Envir. Impact Modules
Temperature change
Vegetation
Inputs for
Other (e.g. precip.)
Water
Sea Level
Agriculture
+
Interface(s)
translating env.
impacts in
changes in key
economic variables
Economic Valuation
 in stocks (K,L,La,NR)
 in productivity
CGE
GHGs emissions
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Evaluating Climate Change Impacts: an Integrated Approach
Steps to conduct the exercise
1. Take an economic model sufficiently disaggregated.
(Simplified but good enough representation of the
economic system).
2. Build a baseline for the future “without climate
change”.
3. Over-impose to the baseline shocks in key economic
variables induced by climate change.
4. Comment results.
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Evaluating Climate Change Impacts: an Integrated Approach
Our CGE Economic Model
GTAP (Global Trade Analysis Project) is a database (66
regions, 57 sectors) but also a global comparative static
applied general equilibrium model calibrated in 1997
The GTAP system of equations is based on
microeconomic foundations providing a detailed
specification of household and firm behaviour within
individual regions and trade linkages between regions.
• Hertel, T.W., (1996) Global Trade Analysis: Modelling and applications,
Cambridge University Press.
• www.gtap.org
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Evaluating Climate Change Impacts: an Integrated Approach
Our CGE Economic Model
• GTAP-E: extended by Burniaux and Truong (2001) in
order to account for an environmental part (CO2
emissions); version 8  8.
• GTAP-EX: our developed version of the model, by
augmenting the industrial disaggregation, especially in
the agricultural sector; version 8  17.
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Evaluating Climate Change Impacts: an Integrated Approach
Regional and sectoral mapping
of GTAP-EX
Regions:
USA:
EU:
EEFSU:
JPN:
RoA1:
Eex:
CHIND:
RoW:
Sectors:
United States
European Union
Eastern Europe and Former
Soviet Union
Japan
Oth. Annex 1 countries
Net Energy Exporters
China and India
Rest of the World
Rice
Wheat
Cereal Crops
Vegetable Fruits
Animals
Forestry
Fishing
Coal
Oil
Gas
Oil Products
Electricity
Water
Energy Intensive industries
Other industries
Market Services
Non-Market Services
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Evaluating Climate Change Impacts: an Integrated Approach
The baseline construction process
Construction of baseline “without climate change” for the
future selecting relevant years (2010, 2030, 2050) and “recalibrating” the model using:
• projected data from G-Cubed model (McKibbin, 1999) for
stocks of capital, labour, population and related productivity
• IMAGE (RIVM 2001) for land productivity.
• McKibbin, W.J, Wilcoxen, P.J., (1998) The Theoretical and Empirical Structure of
the GCubed Model, Economic Modelling, vol. 16(1)
• IMAGE (2001), The IMAGE 2.2 Implementation of the SRES Scenarios, RIVM
CDROM, Bilthoven, The Netherlands.
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Evaluating Climate Change Impacts: an Integrated Approach
Modelling the impacts
Tol (2002) reviews the available studies for impacts on
human health, productivity in agriculture and forestry,
losses of species and ecosystems, sea level rise, energy
consumption and water resources.
He discusses methodological issues and provides a metaanalysis, obtaining “best guesses” for the valuation of the
various impacts
• Tol, R.S.J.,(2002) Estimates the Damage Costs of Climate Change: Benchmark
and Dynamic Estimates, Part I and II, Environmental and Resources Economics,
vol. 21.
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Evaluating Climate Change Impacts: an Integrated Approach
Implementing Climate-Change
Impacts on Health in GTAP-EX
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Evaluating Climate Change Impacts: an Integrated Approach
• Climate change affects human health in several ways. Here
we consider the influence of climate change on heat and cold
stress related diseases (respiratory and cardiovascular), and
on main Vector-borne diseases (malaria, dengue and
schistosomiasis).
• Cardiovascular and respiratory disorders are worsened by
both extreme cold and extreme hot weather and are mainly an
urban phenomenon that affect differently people above and
below 65 years old. Vector-borne diseases may intensify and
spread with warmer and more humid conditions.
• At this preliminary stage the main economic effect of the
changes in health status that we consider are changes in
labour productivity. In particular the change in labour
productivity per year is related via statistical model to the total
number of life years diseased due to the change in 10the
incidence of the above mentioned illness.
Evaluating Climate Change Impacts: an Integrated Approach
Nature of inputs:
Labour productivity loss due to 1°C or 2°C temperature
increase respect to 2000 per country (all).
Steps for implementation:
(a) Compute emission pattern starting from data for 2010,
2030, 2050.
(b) Compute temperature increase respect to 2000 according
to that pattern in 2010, 2030, 2050.
(c) Re-scaling labour productivity losses.
(d) Aggregate losses according to GTAP-EX 8 world regions.
(e) Shock the GTAP-EX system.
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Evaluating Climate Change Impacts: an Integrated Approach
CO2 Emissions
(Giga Ton of C)
35
30
GTC
25
20
15
10
5
0
2000
2010
2020
2030
2040
2050
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Evaluating Climate Change Impacts: an Integrated Approach
Estimated Temperature Increase
Year
2000
2010
2020
2030
2040
2050
Temperature
increase w.r.t.
Pre-industrial
level
0.491
0.494
0.659
0.859
1.114
1.425
Variation w.r.t.
2000
0.0000
0.0029
0.1678
0.3679
0.6229
0.9342
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Evaluating Climate Change Impacts: an Integrated Approach
Labour productivity loss due to
climate change
2010
2030
2050
USA
0.000011
0.001904
0.004919
Labour productivity loss due to climate change
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
0.000056 0.000038 -0.000001
0.00005 -0.000198 -0.000146 -0.000162
0.009999
0.00675 -0.000092 0.009073 -0.035665 -0.026335 -0.029186
0.025832 0.017438 -0.000238 0.023439 -0.092135 -0.068033 -0.075397
 Percentage changes respect to 2010, 2030 and 2050
baselines.
 Aggregated according to GTAP-EX macro-regions.
 These are the shocks to labour productivity direct inputs for
GTAP-EX
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Evaluating Climate Change Impacts: an Integrated Approach
Labour productivity loss due to
climate change: some comments
• We can note firstly that the changes in productivity are quite
small, for example maximum shock is smaller than 0.1%
• We can note that these impacts are both positive and negative.
In particular they are positive (increased productivity) for
developed regions (except JPN) whereas they are negative for
the developing world. This is due to the fact that major labour
productivity losses are induced by vector-borne diseases, that are
in practice equal to zero in the developed countries.
• interesting is the case of JPN where cardiovascular and
respiratory diseases worsen decreasing labour productivity. This
effect that is a counter tendency for developed regions is due to
the high percentage and density of population living in urban
areas.
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Evaluating Climate Change Impacts: an Integrated Approach
Climate change impacts on health:
selected results
2010
2030
2050
Equivalent Variation (1997million US $ respect to the baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
0.663518 3.354671 0.290912 -0.038018 0.588743 -3.600199 -1.395034 -3.519399
191.8071
952.384 89.24757 -9.530933 167.5813 -1063.246 -423.2907 -1092.266
848.296 3539.161 359.0927 -66.77731 600.8062 -3986.771 -1313.981 -4124.344
2010
2030
2050
GDP (quantity index - percentage change respect to the baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
0.000007 0.000032 0.000022 0.000000
0.00003 -0.000093 -0.000077 -0.000082
0.001221 0.005814 0.004074 -0.000051
0.00555 -0.016981 -0.013402 -0.015192
0.003197 0.015026 0.010328 -0.00022
0.01421 -0.040966 -0.024957 -0.036528
2010
2030
2050
CO2 Emissions (percentage change respect to the baselines)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
0.000007
0.00002
0.00001 0.000005 0.000017 -0.000043 -0.000029 -0.00003
0.001087 0.003516 0.001905 0.000728 0.002962 -0.007823 -0.005406 -0.005576
0.000868 0.006073 0.004342 -0.004509 0.005179 -0.01976 -0.010447
-0.0134
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Evaluating Climate Change Impacts: an Integrated Approach
Climate change impacts on health:
comments
1. EV is a welfare indicator: “Equivalent variation is the compensating
payment that in the absence of the economic change moves the
consumer to the welfare level associated with the change. For
example, if we have a price increase, the equivalent variation is the
maximum amount the consumer would be willing to pay to avoid the
price increase.”
2. It is possible to note that negative shocks on labour productivity
translate in negative impacts on GDP and welfare and vice-versa.
The same is true for emission: in general a lower GDP implies lower
emission…
3. …Again is interesting the case of Japan: in 2030 the variation of
GDP respect to the baseline is negative whereas variation of
emissions from the baselines are positive. This is a typical effects
that a CGE model can highlight: a substitution process between
production factor. In this specific case labour is substituted with
capital and, as a consequence, even though output declines the
production mix is nevertheless more polluting.
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Evaluating Climate Change Impacts: an Integrated Approach
Implementing Climate-Change Impacts
on Sea Level Rise in GTAP-EX
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Evaluating Climate Change Impacts: an Integrated Approach
Nature of inputs:
Dry-land loss fraction without coastal protection due to 5, 15,
25 cm of sea level rise estimated for 2010, 2030 and 2050
respectively
Steps for implementation:
(a) Aggregate losses according to GTAP-EX 8 world
regions.
(b) Shock the GTAP-EX system.
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Evaluating Climate Change Impacts: an Integrated Approach
Re- scaled dryland loss due to
sea-level rise
2010
2030
2050
USA
-0.01092
-0.03275
-0.05459
Re-scaled dryland loss due to sea level rise
EU
EEFSU
JPN
RoA1
EEx
-0.00648 -0.00366 -0.03069 -0.00121 -0.03673
-0.01945 -0.01098 -0.09206 -0.00364 -0.11019
-0.03242
-0.0183 -0.15344 -0.00606 -0.18366
CHIND
-0.01659
-0.04976
-0.08293
RoW
-0.03024
-0.09071
-0.15118
 Percentage changes respect to 2010, 2030 and 2050
baselines.
 Aggregation according to GTAP-EX macro-regions.
 These are the shocks to stock of land direct inputs for
GTAP-EX
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Evaluating Climate Change Impacts: an Integrated Approach
Impact of climate-change induced
sea-level rise: selected results
Equivalent Variation (1997million US $ respect to the baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
2010 -1.048711 -1.43142 -0.401172 -0.428043 -0.038618 -7.260132 -2.64881 -4.153444
2030 -41.92249 -43.82682 -8.733319 -2.39755 3.909041 -134.392 -83.41387 -97.01292
2050 -1609.616 -1277.251 -203.6237
150.337 285.1913 -1352.669 -1296.328 -1349.962
GDP (quantity index - percentage change respect to the baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
2010 -0.000015 -0.000007 -0.000014 -0.000014 -0.000004 -0.000172 -0.00018 -0.000092
2030 -0.000195 -0.000124 -0.000162 -0.000121 -0.000067 -0.002142 -0.003128 -0.001373
2050 -0.002242 -0.001455 -0.002026 -0.001154 -0.000009 -0.021133 -0.029887 -0.016601
2010
2030
2050
CO2 Emissions (percentage change respect to the baselines)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
0.000102 0.000121 0.000068 0.000123 0.000116 -0.000134 -0.000065 -0.000033
0.001384 0.001556 0.000978 0.002349 0.001664 -0.001318 -0.00139 -0.00071
0.009607 0.011659 0.004586 0.035115 0.015342 -0.007616 -0.023742 -0.012132
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Evaluating Climate Change Impacts: an Integrated Approach
Impact of climate-change induced
sea-level rise: selected results
1.
In some cases GDP and equivalent variation do not move in the
same direction, this is due the fact that EV doesn’t take into
account capital depreciation, and consequently considers as a
positive investment the investment necessary to maintain capital
stock at its productive capacity. Moreover EV is related to utility
and the functional form used to aggregate utility components
transforms considerably these components.
2. As before the variation in CO2 emissions doesn’t have always
the same sign of GDP variation. Consider, for instance,
developed countries: GDP falls respect to the baseline but CO2
emissions increase. In this case what is highlighted is a
substitution process between land and capital. Interestingly this
substitution seems particularly strong in developed regions
which are relatively capital abundant (USA-EU-Japan-RoA1). On
the contrary in developing regions variations in GDP and
emissions have the same sign highlighting a weaker substitution
possibility between land and capital.
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Evaluating Climate Change Impacts: an Integrated Approach
Implementing Climate-Change Impacts
on Health and Sea Level Rise in GTAP-EX
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Evaluating Climate Change Impacts: an Integrated Approach
Impact of climate change on sea-level
rise and health: selected results
Equivalent Variation (1997million US $ respect to the baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
2010 -0.385192 1.923249 -0.11026 -0.466063 0.550126 -10.86031 -4.043838 -7.672832
2030 149.8862 908.5515 80.51505 -11.93361 171.4879 -1197.555 -506.6593 -1189.219
2050 -760.7727 2261.295 155.3973 83.19036 885.5419 -5336.194 -2608.251 -5471.128
GDP (quantity index - percentage change respect to the baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
2010 -0.000008 0.000025 0.000008 -0.000015 0.000026 -0.000265 -0.000258 -0.000175
2030 0.001026
0.00569 0.003913 -0.000172 0.005484 -0.019121 -0.016529 -0.016564
2050 0.000955 0.013569 0.008301 -0.001374 0.014198 -0.062063 -0.054798
-0.0531
2010
2030
2050
CO2 Emissions (percentage change respect to the baselines)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
0.000109 0.000141 0.000078 0.000128 0.000133 -0.000178 -0.000094 -0.000063
0.002471 0.005071 0.002883 0.003076 0.004626 -0.00914 -0.006795 -0.006285
0.010461 0.017709 0.008925 0.030556 0.020502 -0.02736 -0.034161 -0.025516
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Evaluating Climate Change Impacts: an Integrated Approach
Some Limitations
• The choice of modelling the climate change as a
one-time event. Climate change occurs progressively
over time, and natural systems interact dynamically
with human systems.
• On the environmental side, the climate change has
its own dynamics, due to the adaptation processes of
natural and human systems to the changing
environment.
• On the economic side, the static CGE model does
not take into account the inter-temporal agents
decisions process.
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Evaluating Climate Change Impacts: an Integrated Approach
Future developments
1. To enlarge the spectrum of climate change effects
in the comparative static analysis.
2. To develop the environmental block of equations.
3. To develop a “recursive dynamic” version of the
GTAP-E model (GTAP-ER).
4. To have hard-link integration between modules.
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