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Estimation of the economic impact of temperature changes induced by a shutdown of the thermohaline circulation: an application of FUND

Abstract

The integrated assessment model FUND 2.8n is applied in an assessment to estimate the magnitude of the general market and non-market impacts of temperature changes caused by a possible shutdown of the thermohaline circulation (THC). The monetized impacts of this change in environmental conditions are determined for 207 individual countries for two scenarios: one warming scenario in which the THC weakens but remains intact, and another in which the THC breaks down. Eight different response patterns are identified. The dominant pattern is that a THC shutdown has an offsetting effect on the underlying warming trend. Depending on whether the impacts of warming are initially beneficial or detrimental, the economic effects of a THC shutdown show distinct regional variability. Key economic sectors affected are water resources and energy consumption, as well as cardiovascular and respiratory diseases among health impacts. The maximum national impact of a shutdown of the THC turns out to be of the magnitude of a few per cent of GDP, but the average global impact is much smaller. The results indicate that the temperature effect of a THC shutdown does not create an insurmountable economic threat on a global scale, but may cause severe damages to individual countries. However, a consideration of other climatic impacts such as precipitation and sea level changes is likely to alter the identified trends in economic development.

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Correspondence to P. Michael Link.

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Link, P.M., Tol, R.S.J. Estimation of the economic impact of temperature changes induced by a shutdown of the thermohaline circulation: an application of FUND . Climatic Change 104, 287–304 (2011). https://doi.org/10.1007/s10584-009-9796-7

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  • DOI: https://doi.org/10.1007/s10584-009-9796-7

Keywords

  • Climate Change Impact
  • Income Elasticity
  • North Atlantic Region
  • Environ Resour Econ
  • Welfare Impact