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Estimating a Climate Change Damage Function through General Equilibrium Modeling

Author

Listed:
  • Roberto Roson

    (Department of Economics, University Of Venice C� Foscari)

  • Francesco Bosello

    (Department of Economics, University of Milan)

Abstract

A Climate Change Damage Function (CCDF) is a reduced form relationship linking macroeconomic aggregates (e.g., potential GDP) to climate indicators (e.g., average temperature levels). This function is used in a variety of studies about climate change impacts and policy analysis. However, despite the fact that this function is key in determining results in many integrated assessment models, it is not typically calibrated in a consistent and rigorous way. This paper presents a novel approach, in which several different impacts of climate change are first assessed by means of a full-fledged computable general equilibrium model of the world economy, then results are interpolated to get a simple relationship of the CCDF type. The estimated CCDF is compared with other popular functions used in the literature, to highlight the possible implications associated with the alternative adoption of this functional relationship.

Suggested Citation

  • Roberto Roson & Francesco Bosello, 2007. "Estimating a Climate Change Damage Function through General Equilibrium Modeling," Working Papers 2007_08, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2007_08
    as

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    References listed on IDEAS

    as
    1. Bosello, Francesco & Roson, Roberto & Tol, Richard S.J., 2006. "Economy-wide estimates of the implications of climate change: Human health," Ecological Economics, Elsevier, vol. 58(3), pages 579-591, June.
    2. Andrea Bigano & Maria Berrittella & Roberto Roson & Richard S.J. Tol, 2004. "A General Equilibrium Analysis of Climate Change Impacts on Tourism," Working Papers 2004.127, Fondazione Eni Enrico Mattei.
    3. Francesco Bosello & Roberto Roson & Richard Tol, 2007. "Economy-wide Estimates of the Implications of Climate Change: Sea Level Rise," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(3), pages 549-571, July.
    4. Bigano, Andrea & Bosello, Francesco & Marano, Giuseppe, 2006. "Energy Demand and Temperature: A Dynamic Panel Analysis," International Energy Markets Working Papers 12117, Fondazione Eni Enrico Mattei (FEEM).
    5. Andrea Bigano & Jacqueline M. Hamilton & Richard S.J. Tol, 2005. "The Impact Of Climate Change On Domestic And International Tourism: A Simulation Study," Working Papers FNU-58, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2005.
    6. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, April.
    7. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
    8. Jacqueline M. Hamilton & Richard S.J. Tol, 2004. "The Impact Of Climate Change On Tourism And Recreation," Working Papers FNU-52, Research unit Sustainability and Global Change, Hamburg University, revised Nov 2004.
    9. William D. Nordhaus & David Popp, 1997. "What is the Value of Scientific Knowledge? An Application to Global Warming Using the PRICE Model," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-45.
    10. Burniaux, Jean-Marc & Truong Truong, 2002. "GTAP-E: An Energy-Environmental Version of the GTAP Model," GTAP Technical Papers 923, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    11. Burniaux, Jean-March & Truong, Truong P., 2002. "Gtap-E: An Energy-Environmental Version Of The Gtap Model," Technical Papers 28705, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Richard Tol, 1999. "Spatial and Temporal Efficiency in Climate Policy: Applications of FUND," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(1), pages 33-49, July.
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    Cited by:

    1. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.

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    More about this item

    Keywords

    Climate Change; Damage Function; Integrated Assessment; General Equilibrium.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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