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GTAP Resource #6986

"Global economic consequences arising from the impacts of physical climate risks on agriculture and energy"
by Fernando, Roshen

Food and energy supply chains are two fundamental channels via which climate risks spill over to the economy. To study these effects, we first construct a range of chronic and extreme climate risk indicators. We incorporate the climate risk indicators alongside the historical data on global agriculture and energy production in machine learning algorithms to estimate the historical implications of climate risks on agriculture and energy production. We project the implications of climate risks on agriculture and energy production under three Shared Socioeconomic Pathways. The implications on other sectors are derived using the reliance on agriculture and energy. The implications are assessed as shocks within the global economic model: G-Cubed. We evaluate the G-Cubed simulation results for Real GDP, consumption, investment, exports, imports, and trade and emphasize four main findings with implications for policymaking in climate change. Firstly, we illustrate the importance of incorporating a wide range of both chronic and extreme climate indicators when estimating the historical implications of physical climate risks on agriculture and energy production. Secondly, we illustrate the potential for double dividends from transitioning to sustainable livestock production and renewable energy sources. Thirdly, we demonstrate how the magnitude of climate risks is magnified within a globally interconnected economy depending on the responses of economic agents and the structural economic characteristics. Fourthly, we highlight the importance of considering a wide array of studies focusing on different climate scenarios, employing different methodologies, and producing different estimates to account for the enormous uncertainty involved in analyzing climate change impacts.

Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Version: 01
Created: Fernando, R. (4/15/2023)
Updated: Fernando, R. (4/15/2023)
Visits: 342
- Dynamic modeling
- Climate impacts
- Natural disasters
- Trade and the environment

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