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Consumer welfare and climate change in Greenland

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  • Affuso, Ermanno

Abstract

This manuscript aims to assess the potential impact of climate change on consumer welfare in Greenland, an arctic economy that has been historically affected by climate variation. Three proxies for climate change: (i) annual mass change anomaly of the ice cap, (ii) annual temperature anomalies, and (iii) annual heating degree days anomalies are used to test the hypothesis that climate is a potential determinant of consumer expenditure. The Quadratic Almost Ideal Demand System, in its original specification, is used to test this hypothesis. The empirical analysis, supported by Granger-causality tests, shows that the annual mass change anomaly of the ice cap is a statistically and economically significant determinant of consumption of non-durable goods in Greenland. A counterfactual analysis predicts that climate change could have decreased the wealth of consumers with an aggregate cumulative social welfare loss of 2010-US$ 21.63 million between 2003 and 2017.

Suggested Citation

  • Affuso, Ermanno, 2019. "Consumer welfare and climate change in Greenland," Energy Economics, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:eneeco:v:84:y:2019:i:c:s0140988319302865
    DOI: 10.1016/j.eneco.2019.104505
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    References listed on IDEAS

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    Cited by:

    1. Ahmad Samim Pouya & Özge Can Niyaz, 2022. "Modeling Turkish Households’ Climate Change-Related Behaviors: Theory of Planned Behavior Approach," Sustainability, MDPI, vol. 14(18), pages 1-17, September.
    2. Loarne-Lemaire, Séverine Le & Bertrand, Gaël & Razgallah, Meriam & Maalaoui, Adnane & Kallmuenzer, Andreas, 2021. "Women in innovation processes as a solution to climate change: A systematic literature review and an agenda for future research," Technological Forecasting and Social Change, Elsevier, vol. 164(C).
    3. Affuso, Ermanno & Buleca, Jan & Zhang, Dengjun & Zoricak, Martin, 2023. "The welfare impact of Euro on European consumers," Finance Research Letters, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    Climate change; Consumer welfare; Maximum entropy econometrics; Transfer entropy causality; Greenland; Melting Arctic ice;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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