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Climate-change feedback on economic growth: explorations with a dynamic general equilibrium model

  • FABIO EBOLI, RAMIRO PARRADO and ROBERTO ROSON

Abstract

Human-generated greenhouse gases depend on the level and emissions intensity of economic activities. Therefore, most climate-change studies are based on the models and scenarios of economic growth. Economic growth itself, however, is likely to be affected by climate-change impacts. These impacts affect the economy in multiple and complex ways: changes in productivity, resource endowments, production and consumption patterns. We use a new dynamic, multi-regional computable general equilibrium (CGE) model of the world economy to answer the following questions: Will climate-change impacts significantly affect growth and wealth distribution in the world? Should forecasts of human-induced greenhouse gas emissions be revised, once the climate-change impacts are taken into account? We found that, even though economic growth and emission paths do not change significantly at the global level, relevant differences exist at the regional and sectoral level. In particular, developing countries appear to suffer the most from the climate-change impacts.

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The ICES model (http://www.feem-web.it/ices/) has been developed at Fondazione Eni Enrico Mattei – Sustainable Development Programme. Results presented in this paper have been produced within the framework of the project ENSEMBLES – ENSEMBLE-based Predictions of Climate Change and their Impacts, contract No. 505539, funded by the European Commission within the Sixth Framework Programme.

Francesco Bosello collaborated, at various stages, in the development of the ICES model and in this paper. We would also like to thank three anonymous referees for valuable and helpful comments.

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Environment and Development Economics
  • ISSN: 1355-770X
  • EISSN: 1469-4395
  • URL: /core/journals/environment-and-development-economics
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