Environmental and Resource Economics

, Volume 72, Issue 2, pp 309–363 | Cite as

The Sectoral and Regional Economic Consequences of Climate Change to 2060

  • Rob DellinkEmail author
  • Elisa Lanzi
  • Jean Chateau


This paper presents a new detailed global quantitative assessment of the economic consequences of climate change (i.e. climate damages) to 2060. The analysis is based on an assessment of a wide range of impacts: changes in crop yields, loss of land and capital due to sea level rise, changes in fisheries catches, capital damages from hurricanes, labour productivity changes and changes in health care expenditures from diseases and heat stress, changes in tourism flows, and changes in energy demand for cooling and heating. A multi-region, multi-sector dynamic computable general equilibrium model is used to link different impacts until 2060 directly to specific drivers of economic growth, including labour productivity, capital stocks and land supply, as well as assess the indirect effects these impacts have on the rest of the economy, and on the economies of other countries. It uses a novel production function approach to identify which aspects of economic activity are directly affected by climate change. The model results show that damages are projected to rise twice as fast as global economic activity; global annual Gross Domestic Product losses are projected to be 1.0–3.3% by 2060. Of the impacts that are modelled, impacts on labour productivity and agriculture are projected to have the largest negative economic consequences. Damages from sea level rise grow most rapidly after the middle of the century. Damages to energy and tourism are very small from a global perspective, as benefits in some regions balance damages in others. Climate-induced damages from hurricanes may have significant effects on local communities, but the macroeconomic consequences are projected to be very small. Net economic consequences are projected to be especially large in Africa and Asia, where the regional economies are vulnerable to a range of different climate impacts. For some countries in higher latitudes, economic benefits can arise from gains in tourism, energy and health. The global assessment also shows that countries that are relatively less affected by climate change may reap trade gains.


Economic growth Climate change impacts Climate change 

JEL Classification

D58 O44 Q54 


  1. Agrawala S, Fankhauser S (2008) Putting climate change adaptation in an economic context. In: Economic aspects of adaptation to climate change: costs, benefits and policy instruments. OECD Publishing, Paris
  2. Agrawala S et al (2011) Plan or react? Analysis of adaptation costs and benefits using integrated assessment models. Clim Change Econ 2(3):175–208Google Scholar
  3. Akpinar-Ferrand E, Singh A (2010) Modeling increased demand of energy for air conditioners and consequent CO\(_2\) emissions to minimize health risks due to climate change in India. Environ Sci Policy 13(8):702–712Google Scholar
  4. Barro R, Sala-i-Martin X (2004) Economic growth. MIT Press, CambridgeGoogle Scholar
  5. Berrittella M et al (2006) A general equilibrium analysis of climate change impacts on tourism. Tour Manag 25:913–924Google Scholar
  6. Bigano A, Hamilton JM, Tol RSJ (2007) The impact of climate change on domestic and international tourism: a simulation study. Integr Assess J 7:25–49Google Scholar
  7. Bigano A et al (2008) Economy-wide impacts of climate change: a joint analysis for sea level rise and tourism. Mitig Adapt Strateg Glob Change 13(8):765–791Google Scholar
  8. Bosello F, Parrado R (2014) Climate change impacts and market driven adaptation: the costs of inaction including market rigidities, FEEM Working Paper, No. 64.2014Google Scholar
  9. Bosello F, Roson R, Tol RSJ (2006) Economy wide estimates of the implications of climate change: human health. Ecol Econ 58:579–591Google Scholar
  10. Bosello F, Eboli F, Pierfederici R (2012) Assessing the economic impacts of climate change. An updated CGE point of view, FEEM Working Paper, No. 2.2012Google Scholar
  11. Brown S et al (2011) The impacts and economic costs of sea-level rise in europe and the costs and benefits of adaptation. Summary of results from the EC RTD ClimateCost Project. In: Watkiss P (ed) The ClimateCost Project. Final Report. Volume 1: Europe. Stockholm Environment Institute, SwedenGoogle Scholar
  12. Chateau J, Rebolledo C, Dellink R (2011) An economic projection to 2050: the OECD “ENV-Linkages” Model Baseline, OECD Environment Working Papers, No. 41. OECD Publishing, Paris.
  13. Chateau J, Dellink R, Lanzi E (2014) An overview of the OECD ENV-linkages model: version 3, OECD Environment Working Papers, No. 65. OECD Publishing, Paris.
  14. Cheung WWL, Lam VWY, Pauly D (2008) Dynamic bioclimate envelope model to predict climate-induced changes in distribution of marine fishes and invertebrates. In: Cheung WWL, Lam VWY, Pauly D (eds) Modelling present and climate-shifted distributions of marine fishes and invertebrates, fisheries centre research reports 16(3). University of British Columbia, Vancouver, pp 5–50Google Scholar
  15. Cheung WWL, Lam VWY, Sarmiento JL, Kearney K, Watson RR, Zeller D, Pauly D (2010) Large-scale redistribution of maximum fisheries catch potential in the global ocean under climate change. Glob Change Biol 16:24–35Google Scholar
  16. Chima RI, Goodman CA, Mills A (2003) The economic impact of malaria in Africa: a critical review of the evidence. Health Policy 63:17–36Google Scholar
  17. Ciscar JC et al (2011) Physical and economic consequences of climate change in Europe. Proc Natl Acad Sci PNAS 108:2678–2683Google Scholar
  18. Ciscar JC et al (2014) Climate impacts in Europe. The JRC PESETA II project, JRC Scientific and Policy Reports, No. EUR 26586EN. Publications Office of the European Union, LuxembourgGoogle Scholar
  19. De Bruin KC, Dellink RB, Tol RSJ (2009) AD-DICE: an implementation of adaptation in the DICE model. Clim Change 95:63–81Google Scholar
  20. Dell M, Jones BF, Olken BA (2009) Temperature and income: reconciling new cross-sectional and panel estimates. Am Econ Rev 99(2):198–204Google Scholar
  21. Dell M, Jones BF, Olken BA (2013) What do we learn from the weather? The new climate-economy literature, NBER (National Bureau of Economic Research) Working Paper Series, No. 19578. NBER, Cambridge, MAGoogle Scholar
  22. Dellink R, Chateau J, Lanzi E, Magné B (2017) Long-term economic growth projections in the shared socioeconomic pathways. Glob Environ Change 42:200–214.
  23. Eboli F, Parrado R, Roson R (2010) Climate-change feedback on economic growth: explorations with a dynamic general equilibrium model. Environ Dev Econ 15:515–533Google Scholar
  24. EUROSTAT (2013) Population projection, Eurostat, the statistical office of the European Union. Online Database
  25. Garnaut R (2008) The Garnaut climate change review: final report. Cambridge University Press, CambridgeGoogle Scholar
  26. Garnaut R (2011) The Garnaut review 2011: Australia in the global response to climate change. Cambridge University Press, CambridgeGoogle Scholar
  27. Graff Zivin J, Neidell M (2014) Temperature and the allocation of time: implications for climate change. J Labor Econ 32:1–26Google Scholar
  28. Havlík PD et al (2015) Global climate change, food supply and livestock production systems: a bioeconomic analysis. In: Elbehri A (ed) Climate change and food systems: global assessments and implications for food security and trade. Food Agriculture Organization of the United Nations (FAO), RomeGoogle Scholar
  29. Hertel TW, Burke MB, Lobell DB (2010) The poverty implications of climate-induced crop yield changes by 2030. Glob Environ Change 20:577–585Google Scholar
  30. Hoogenboom G et al (2012) Decision support system for agrotechnology transfer (DSSAT) version 4.5. University of Hawaii, Honolulu, Hawaii, CD-ROMGoogle Scholar
  31. Howard P, Sterner T (2017) Few and not so far between: a meta-analysis of climate damage estimates. Environ Resour Econ 68(1):197–225Google Scholar
  32. Hsiang SM, Jina AS (2014) The causal effect of environmental catastrophe on long-run economic growth. NBER Workshop Paper, No. 20352Google Scholar
  33. Hyman RC, Reilly JM, Babiker MH, De Masin A, Jacoby HD (2002) Modeling non-CO\(_2\) greenhouse gas abatement. Environ Model Assess 8(3):175–86Google Scholar
  34. IEA (2013a) Redrawing the energy climate map. IEA, ParisGoogle Scholar
  35. IEA (2013b) World Energy Outlook 2013. IEA, Paris.
  36. IEA (2014) World Energy Outlook 2014. IEA, Paris.
  37. IEA (2015) World Energy Outlook Special Report on Energy and Climate Change. International Energy Agency, ParisGoogle Scholar
  38. Ignaciuk A (2015) Adapting agriculture to climate change: a role for public policies, OECD Food, Agriculture and Fisheries Papers, No. 85. OECD Publishing, Paris.
  39. Ignaciuk A, Mason-D’Croz D (2014) Modelling adaptation to climate change in agriculture, OECD Food, Agriculture and Fisheries Papers, No. 70. OECD Publishing, Paris.
  40. IMF(2013) World Economic Outlook Database October 2013.
  41. IMF (2014) World Economic Outlook. Washington, DCGoogle Scholar
  42. IPCC (2013) Climate change 2013: the physical science basis. In: [Stocker TF, Qin D, Plattner G-K, Tignor M, Allen SK, Boschung J, Nauels A, Xia Y, Bex V, Midgley PM (eds) Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, p 1535Google Scholar
  43. IPCC (2014a) Climate change 2014: impacts, adaptation, and vulnerability. Part A: global and sectoral aspects. In: Field CB, Barros VR, Dokken DJ, Mach KJ, Mastrandrea MD, Bilir TE, Chatterjee M, Ebi KL, Estrada YO, Genova RC, Girma B, Kissel ES, Levy AN, MacCracken S, Mastrandrea PR, White LL (eds) Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, p 1132Google Scholar
  44. IPCC (2014b) Climate change 2014: mitigation of climate change. In: Edenhofer O, Pichs-Madruga R, Sokona Y, Farahani E, Kadner S, Seyboth K, Adler A, Baum I, Brunner S, Eickemeier P, Kriemann B, Savolainen J, Schlömer S, von Stechow C, Zwickel T, Minx JC (eds) Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, CambridgeGoogle Scholar
  45. Johansson Å, Guillemette Y, Murtin F, Turner D, Nicoletti G, de la Maisonneuve C, Bagnoli P, Bousquet G, Spinelli F (2013) Long-term growth scenarios, OECD Economics Department Working Papers, No. 1000. OECD Publishing, Paris.
  46. Jones JW et al (2003) DSSAT cropping system model. Eur J Agron 18:235–265Google Scholar
  47. Kjellstrom T et al (2009) The direct impact of climate change on regional labor productivity. Arch Environ Occup Health 64(4):217–27Google Scholar
  48. Krugman P (1989) Differences in income elasticities and trends in real exchange rates. Eur Econ Rev 33(5):1031–1046Google Scholar
  49. Leakey ADB (2009) Rising atmospheric carbon dioxide concentration and the future of C4 crops for food and fuel. Proc R Soc B 276(1666):2333–2343Google Scholar
  50. LEI (2014) The MAGNET model: module description, Gert Woltjer & Marijke Kuiper with contributions from Aikaterini Kavallari, Hans van Meijl, Jeff Powell, Martine Rutten. Lindsay Shutes & Andrzej Tabeau, LEI Wageningen UR, Wageningen, August 2014Google Scholar
  51. Link PM, Tol RSJ (2004) Possible economic impacts of a shutdown of the thermohaline circulation: an application of FUND. Port Econ J 3:99–114Google Scholar
  52. Lluch C (1973) The extended linear expenditure system. Eur Econ Rev 4:21–32Google Scholar
  53. Martens WJM (1998) Health impacts of climate change and ozone depletion: an ecoepidemiologic modelling approach. Environ Health Perspect 106(1):241–251Google Scholar
  54. Martens WJM, Jetten TH, Rotmans J, Niessen LW (1995) Climate change and vector-borne diseases: a global modelling perspective. Glob Environ Change 5(3):195–209Google Scholar
  55. Martens WJM, Jetten TH, Focks DA (1997) Sensitivity of malaria, schistosomiasis and dengue to global warming. Clim Change 35:145–156Google Scholar
  56. Martin PH, Lefebvre MG (1995) Malaria and climate: sensitivity of malaria potential transmission to climate. Ambio 24(4):200–207Google Scholar
  57. Meinshausen M, Raper SCB, Wigley TML (2011) Emulating coupled atmosphere-ocean and carbon cycle models with a simpler model, MAGICC6: part I—model description and calibration. Atmos Chem Phys 11:1417–1456Google Scholar
  58. Mendelsohn R, Emanuel K, Chonabayashi S, Bakkensen L (2012) The impact of climate change on global tropical cyclone damage. Nat Clim Change 2:205–209Google Scholar
  59. Mima S, Criqui P, Watkiss P (2011) The impacts and economic costs of climate change on energy in Europe. Summary of results from the EC RTD ClimateCost Project. In: Watkiss P (ed) The ClimateCost Project. Final Report. Volume 1: Europe. Published by the Stockholm Environment Institute, Sweden.
  60. Morita T, Kainuma M, Harasawa H, Kai K, Matsuoka Y (1994) An estimation of climatic change effects on malaria, Working Paper, National Institute for Environmental Studies, TsukubaGoogle Scholar
  61. Murray CJL, Lopez AD (1996) Glob Health Stat. Harvard School of Public Health, CambridgeGoogle Scholar
  62. Nakicenovic N, Swart R (eds) (2000) Special Report on Emissions Scenarios. A Special Report of Working Group III of the Intergovernmental Panel on Climate Change. Cambridge University Press, CambridgeGoogle Scholar
  63. Narayanan B, Aguiar A, McDougall R (eds) (2012) Global trade, assistance, and production: The GTAP 8 data base, Center for Global Trade Analysis, Purdue University.
  64. Nelson GC et al (2014) Climate change effects on agriculture: economic responses to biophysical shocks. Proc Natl Acad Sci 111(9):3274–3279Google Scholar
  65. Nordhaus WD (1994) Managing the global commons: the economics of the greenhouse effect. MIT Press, Cambridge, MAGoogle Scholar
  66. Nordhaus WD (2007) A question of balance. Yale University Press, New HavenGoogle Scholar
  67. Nordhaus WD (2010) Economic aspects of global warming in a post-Copenhagen environment. Proc Natl Acad Sci 107(26):11721–11726Google Scholar
  68. Nordhaus WD (2011) Estimates of the social cost of carbon: background and results from the RICE-2011 model. Conn. Cowles Foundation for Research in Economics, Yale University, New HavenGoogle Scholar
  69. OECD (2005) Trade and structural adjustment. OECD, Trade Directorate, OECD Publishing, Paris.
  70. OECD (2011) Annex D. The OECD policy evaluation model. In: Evaluation of agricultural policy reforms in the United States. OECD Publishing, Paris.
  71. OECD (2012) OECD Environmental Outlook to 2050: the consequences of inaction. OECD Publishing, Paris
  72. OECD (2013) OECD Economic Outlook, vol 2013 issue 1. OECD Publishing, Paris.
  73. OECD (2014) OECD Economic Outlook, vol 2014/1. OECD Publishing, Paris.
  74. OECD (2015a) Climate change risks and adaptation: linking policy and economics. OECD Publishing, Paris.
  75. OECD (2015b) The economic consequences of climate change. OECD Publishing, Paris.
  76. Risky Business Project (2014) The economic risks of climate change in the United States: a climate risk assessment for the United States.
  77. Rogelj J, Meinshausen M, Knutti R (2012) Global warming under old and new scenarios using IPCC climate sensitivity range estimates. Nat Clim Change 2:248–253Google Scholar
  78. Rosegrant MW, IMPACT Development Team (2012) International model for policy analysis of agricultural commodities and trade (IMPACT): Model Description. International Food Policy Research Institute (IFPRI), Washington, DC (2).
  79. Rosenzweig C et al (2013) Assessing agricultural risks of climate change in the 21st century in a global gridded crop model intercomparison. Proc Natl Acad Sci PNAS 111(9):3268–3273Google Scholar
  80. Roson R, Van der Mensbrugghe D (2012) Climate change and economic growth: impacts and interactions. Int J Sustain Econ 4:270–285Google Scholar
  81. Schellnhuber HJ, Frieler K, Kabat P (2013) The elephant, the blind, and the ISI-MIP. Proc Natl Acad Sci PNAS 111(9):3225–3227Google Scholar
  82. Somanathan E, Somanathan R, Sudarshan A, Tewari M (2014) The impacts of temperature on productivity and labor supply: evidence from Indian manufacturing, Indian Statistical Institute Discussion Paper 14–10, DelhiGoogle Scholar
  83. Steininger KW et al (2015) Economic evaluation of climate change impacts: development of a cross-sectoral framework and results for Austria. Springer International Publishing, SwitzerlandGoogle Scholar
  84. Stern N (2007) Stern review: the economics of climate change. CUP, CambridgeGoogle Scholar
  85. Sue Wing I, Lanzi E (2014) Integrated assessment of climate change impacts: conceptual frameworks, modelling approaches and research needs, OECD Environment Working Papers, No. 66. OECD Publishing, ParisGoogle Scholar
  86. Tol RSJ (2002) New estimates of the damage costs of climate change, part I: benchmark estimates. Environ Resour Econ 21(1):47–73Google Scholar
  87. Tol RSJ (2005) Emission abatement versus development as strategies to reduce vulnerability to climate change: an application of FUND. Environ Dev Econ 10(5):615–629Google Scholar
  88. Tol RSJ, Dowlatabadi H (2001) Vector-borne diseases, climate change, and economic growth. Integr Assess 2:173–181Google Scholar
  89. United Nations (2013) World population prospects: the 2012 revision. UN Department of Economic and Social AffairsGoogle Scholar
  90. US EPA. United States Environmental Protection Agency (2012) Global anthropogenic non-co\(_2\) greenhouse gas emissions: 1990–2030Google Scholar
  91. US EPA (2006) Global mitigation of non-CO\(_2\) greenhouse gases. United States Environmental Protection Agency, Washington DC, June 2006Google Scholar
  92. US Interagency Working Group on Social Cost of Carbon (2010) Social cost of carbon for regulatory impact analysis—under executive order 12866, Technical Support DocumentGoogle Scholar
  93. US Interagency Working Group on Social Cost of Carbon (2013) Technical update of the social cost of carbon for regulatory impact analysis—under executive order 12866, Technical Support DocumentGoogle Scholar
  94. Vafeidis AT, Nicholls RJ, McFadden L, Tol RSJ, Hinkel J, Spencer T, Grashoff PS, Boot G, Klein RJT (2008) A new global coastal database for impact and vulnerability analysis to sea level rise. J Coast Res 24(4):917–924Google Scholar
  95. Van Vuuren DP, Riahi K, Moss R, Edmonds J, Thomson A, Nakicenovic N, Kram T, Berkhout F, Swart R, Janetos A, Rose SK, Arnell N (2012) A proposal for a new scenario framework to support research and assessment in different climate research communities. Glob Environ Change 22(1):21–35Google Scholar
  96. Van Vuuren DP, Kriegler E, O’Neill BC, Ebi KL, Riahi K, Carter TR, Edmonds J, Hallegatte S, Kram T, Mathur R, Winkler H (2014) A new scenario framework for climate change research: scenario matrix architecture. Clim Change 122:373–386Google Scholar
  97. Von Lampe M et al (2014) Why do global long-term scenarios for agriculture differ? An overview of the AgMIP global economic model intercomparison. Agric Econ 45(1):3–20Google Scholar
  98. Warren R, Hope C, Mastrandrea M, Tol RSJ, Adger WN, Lorenzoni I (2006) Spotlighting impacts functions in integrated assessment, Tyndall Centre Working Papers, No. 91. Tyndall Centre for Climate Change ResearchGoogle Scholar

Copyright information

© Springer Science+Business Media B.V., part of Springer Nature 2017

Authors and Affiliations

  1. 1.OECD Environment DirectorateParisFrance

Personalised recommendations