Economy-Wide Impacts of Climate Change: A Joint Analysis for Sea Level Rise and Tourism

Abstract

While climate change impacts on human life have well defined and different origins, the interactions among the diverse impacts are not yet fully understood. Their final effects, however, especially those involving social-economic responses, are likely to play an important role. This paper is one of the first attempts to disentangle and highlight the role of these interactions. It focuses on the economic assessment of two specific climate change impacts: sea-level rise and changes in tourism flows. By using a Computable General Equilibrium (CGE) model the two impacts categories are first analysed separately and then jointly. Considered separately, in 2050, the forecasted 25 cm. of sea level rise imply a GDP loss ranging from (-) 0.1% in South East Asia to almost no loss in Canada, while redistribution of tourism flows - which in terms of arrivals favours Western Europe, Japan, Korea and Canada and penalises all the other world regions - triggers GDP losses ranging from (-) 0.5% in Small Island States to (-) 0.0004% in Canada. GDP gainers are Australia, New Zealand, Western Europe, Middle East and South Asia.

Keywords: Climate change, Sea level rise, Tourism, Computable General Equilibrium Models

JEL Classification: C68, D58, Q25