Exploring the Role of Structural Transformation in Addressing Climate Change

45 Pages Posted: 21 Aug 2023

See all articles by Johannes Koch

Johannes Koch

Potsdam-Institut für Klimafolgenforschung (PIK)

Marian Leimbach

Potsdam-Institut für Klimafolgenforschung (PIK)

Marcos Marcolino

affiliation not provided to SSRN

Ramiro Parrado

Fondazione Eni Enrico Mattei (FEEM); CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici; Ca Foscari University of Venice - SMCC Phd

Abstract

We develop a global structural transformation integrated assessment model to study the interactions between the sectoral reallocation of economic activity, climate change and mitigation policies. The model integrates global climate-economy interactions and sectoral heterogeneity in climate vulnerabilities and mitigation capabilities. We quantify distributional effects across regions and sectors due to regional coordination and damages from climate change. We find that global coordination leads to a decrease in global emissions, welfare gains for developing regions, and a decrease in emission intensity in all regions. On the sectoral level, we find that global coordination leads to shift from agriculture and manufacturing towards services, where production is less energy intensive and substitution of energy sources is easier. The exception is SSA, where the manufacturing sector grows in the short-term in order to sustain the increase in investment associated with lower damages and higher economic growth. The contribution of structural transformation in the reduction of emission intensity varies significantly between regions, accounting between 1.5% and 37% of the overall decline, yet remains secondary to the role of sector-level emission intensity reductions. Further results suggest that in low-income countries, increasing climate damages may trap labor in the agricultural sector, threatening to disrupt their development.

Keywords: structural transformation, climate change, integrated assessment model, regional coordination

Suggested Citation

Koch, Johannes and Leimbach, Marian and Marcolino, Marcos and Parrado, Ramiro and Parrado, Ramiro, Exploring the Role of Structural Transformation in Addressing Climate Change. Available at SSRN: https://ssrn.com/abstract=4547308 or http://dx.doi.org/10.2139/ssrn.4547308

Johannes Koch (Contact Author)

Potsdam-Institut für Klimafolgenforschung (PIK) ( email )

Marian Leimbach

Potsdam-Institut für Klimafolgenforschung (PIK) ( email )

Telegrafenberg 31
Potsdam, Brandenburg 14473
Germany

Marcos Marcolino

affiliation not provided to SSRN ( email )

No Address Available

Ramiro Parrado

Fondazione Eni Enrico Mattei (FEEM) ( email )

Isola di San Giorgio Maggiore
Venezia, VE 30124
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Ca Foscari University of Venice - SMCC Phd ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
111
Abstract Views
253
Rank
505,914
PlumX Metrics