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Fondazione Eni Enrico Mattei Modelling the Economic Impact of Climate Change: Early Results, Methodological Challenges Roberto Roson Università CaFoscari,

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Presentation on theme: "Fondazione Eni Enrico Mattei Modelling the Economic Impact of Climate Change: Early Results, Methodological Challenges Roberto Roson Università CaFoscari,"— Presentation transcript:

1 Fondazione Eni Enrico Mattei Modelling the Economic Impact of Climate Change: Early Results, Methodological Challenges Roberto Roson Università CaFoscari, ICTP and FEEM EEE Seminar, Trieste, December 16th, 2003

2 Fondazione Eni Enrico Mattei To provide a basic overview of the methodology To illustrate and comment some early simulation results Motivation

3 Fondazione Eni Enrico Mattei Integrated Assessment Models Myth and Reality

4 Fondazione Eni Enrico Mattei An Ideal IAM Climate System(s) Socio-Economic System(s) Physical Effects Emissions

5 Fondazione Eni Enrico Mattei Actual Approach #1: IPCC A series of socio-economic scenarios (A1, A2, B1, B2) Forecasts of future climate consistent with given benchmarks No feedback on the economy

6 Fondazione Eni Enrico Mattei Actual Approach #2: RICE A series of parallel regional growth model linked by the climate externality Emissions proportional to GDP Climate module translates emissions into temperature changes Temperature affects productivity (potential GDP)

7 Fondazione Eni Enrico Mattei the description of the world economic structure is often too simplistic: limited number of industries (sometimes only one good, available for both consumption and investment), poor or absent description of international trade and capital flows. the multi-dimensional nature of the impact of the climate change on the economic systems is disregarded. This is usually accommodated by specific ad-hoc relationships, making a certain fraction of potential income melting away as temperature increases Inadequacy of Current IAM Models

8 Fondazione Eni Enrico Mattei The General Equilibrium Concept p q S(p,…) D(p,…)

9 Fondazione Eni Enrico Mattei Are GE effects relevant in this context?

10 Fondazione Eni Enrico Mattei How the model works

11 Fondazione Eni Enrico Mattei Simulation #1: Sea Level Rise Two scenarios: no protection/ full protection NP: reduction in the land stock FP: additional protective investment expenditure

12 Fondazione Eni Enrico Mattei Early Results: Sea Level Rise

13 Fondazione Eni Enrico Mattei Simulation #2: Health Two simultaneous effects Variations in labour stock/productivity Exogenous change in health services expenditure (by the public sector)

14 Fondazione Eni Enrico Mattei Early Results: Health 2050 Change in Labour Productivity ( % change) Change in Health Expenditure ( % change) Change in value of GDP ( % change) CO2 Emissions ( % change) USA EU EEFSU JPN RoA EEx CHIND RoW

15 Fondazione Eni Enrico Mattei Simulation #3: Tourism Estimation of O/D matrices of tourists with and without climate change Hypothesis: % change in the number of tourists in a region = % change of tourism expenditure Apply exogenous variations in the consumption demand of (1) recreational services and (2) hotels and restaurants within the broader sector Trade


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