Climate Change and Extreme Events: An Assessment of Economic Implications

31 Pages Posted: 4 Apr 2006

See all articles by Roberto Roson

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia; Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy; Loyola Andalucia University

Alvaro Calzadilla

Abdus Salam International Centre Theoretical Physics (ICTP)

Francesco Pauli

University of Padua

Date Written: March 2006

Abstract

We use a general equilibrium model of the world economy, and a regional economic growth model, to assess the economic implications of vulnerability from extreme meteorological events, induced by the climate change. In particular, we first consider the impact of climate change on ENSO and NAO oceanic oscillations and, subsequently, the implied variation on regional expected damages. We found that expected damages from extreme events are increasing in the United States, Europe and Russia, and Russia, and decreasing in energy exporting countries. Two economic implications are taken into account: (1) short-term impacts, due to changes in the demand structure, generated by higher/lower precautionary saving, and (2) variations in regional economic growth paths. We found that indirect short-term effects (variations in savings due to higher or lower likelihood of natural disasters) can have an impact on regional economics, whose order of magnitude is comparable to the one of direct damages. On the other hand, we highlight that higher vulnerability from extreme events translates into higher volatility in the economic growth path, and vice versa.

Keywords: Climate Change, Extreme Events, Computable General Equilibrium Models, Precautionary Savings, Economic Growth

JEL Classification: D58, D91, Q54

Suggested Citation

Roson, Roberto and Calzadilla, Alvaro and Pauli, Francesco, Climate Change and Extreme Events: An Assessment of Economic Implications (March 2006). FEEM Working Paper No. 44.2006, University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 18/06, Available at SSRN: https://ssrn.com/abstract=893035 or http://dx.doi.org/10.2139/ssrn.893035

Roberto Roson (Contact Author)

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy
+39 041 2349147 (Phone)
+39 041 2349176 (Fax)

HOME PAGE: http://venus.unive.it/roson

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

viale Filippetti, 9
Milan, 20122
Italy

Loyola Andalucia University ( email )

Escritor Castilla Aguayo no. 4
Cordoba, CORDOBA 14004
Spain

Alvaro Calzadilla

Abdus Salam International Centre Theoretical Physics (ICTP) ( email )

Strada Costiera 11
34100 Trieste
Italy

Francesco Pauli

University of Padua ( email )

Via 8 Febbraio, 2
Padova, Vicenza 35122
Italy

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