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Climate change damage (or, more correctly, impact) functions relate variations in temperature (or other climate variables) to economic impacts in various dimensions, and are at the basis of quantitative modeling exercises for the assessment of climate change policies. This document provides a summary of results from a series of meta-analyses aimed at estimating parameters for six specific damage functions, referring to: sea level rise, agricultural productivity, heat effects on labor productivity, human health, tourism flows, and households' energy demand. All parameters of the damage functions are estimated for each of the 140 countries and regions in the Global Trade Analysis Project 9 data set. To illustrate the salient characteristics of the estimates, the change in real gross domestic product is approximated for the different effects, in all regions, corresponding to an increase in average temperature of +3 C. After considering the overall impact, the paper highlights which factor is the most significant one in each country, and elaborates on the distributional consequences of climate change.
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The Earth's climate has already begun to change and will inevitably continue to do so. Even if the targets set in the Paris Agreement are met-to keep the global surface temperature increase below 2 degrees Celsius relative to preindustrial levels-many regions will still suffer severely from the consequences of climate change. They will have more frequent extreme weather events, changes in precipitation patterns, rising sea levels, temperature increases, and many other related effects (IPCC 2018). In this context, technology is certainly a major tool to increase societies' ability to adapt to the adverse effects of climate change (Klein and Tol 1997; Miao 2017; GCA 2019). International technology transfer hence becomes particularly important because a large fraction of the innovation activity in today's knowledge-based economy takes place in the Global North, while technologies for climate change adaptation are urgently needed in low- and middle-income countries, which are particularly vulnerable to climate shocks (Fankhauser and McDermott 2014) Increasing the availability of technology in vulnerable countries requires knowledge of the current geography of innovation. To that end, this report uses patent data to describe and quantify the invention and global diffusion of technologies for climate change adaptation over recent decades based on a global patent database. Importantly, relying on patent data restricts the scope of the analysis to solutions for adaptation that are at the technological frontier and excludes the role of nontechnological forms of innovation and low-tech options. A particular emphasis is put on the case of low- and middle-income countries, which combine high vulnerability to climate change with low technological resources. The analysis relies on patent data from the World Patent Statistical Database (PATSTAT), maintained by the European Patent Office (EPO), which covers the population of patents filed worldwide. We use the EPO's new "Y02A" category to identify all patents in PATSTAT pertaining to "technologies for adaptation to climate change." The classification was released in April 2018 and has so far never been used in empirical analyses. Although innovation scholars and analysts widely use patent data to map technology fields, such data do have some drawbacks, as the report discusses. The patent data are thus complemented with data on foreign direct investment (FDI), which allow us to test the robustness of the results on technology transfer.
Adaptation to Climate Change --- Environment --- Environmental Engineering --- Patents --- Science and Technology Development --- Science of Climate Change --- Technology Innovation --- Technology Transfer
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This paper examines the impacts of weather shocks, defined as rainfall or growing degree days more than a standard deviation from their respective long-run means, on household consumption per capita and child height-for-age. The results reveal that the current risk-coping mechanisms are not effective in protecting these two dimensions of welfare from erratic weather patterns. These findings imply that the change in the patterns of climatic variability associated with climate change is likely to reduce the effectiveness of the current coping mechanisms even more and thus increase household vulnerability further. The results reveal that weather shocks have substantial (negative as well as positive) effects on welfare that vary across regions (North vs. Center and South) and socio-economic characteristics (education and gender). The heterogeneous impacts of climatic variability suggest that a "tailored" approach to designing programs aimed at decreasing the sensitivity and increasing the capacity of rural households to adapt to climate change in Mexico is likely to be more effective.
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This paper examines the impacts of weather shocks, defined as rainfall or growing degree days more than a standard deviation from their respective long-run means, on household consumption per capita and child height-for-age. The results reveal that the current risk-coping mechanisms are not effective in protecting these two dimensions of welfare from erratic weather patterns. These findings imply that the change in the patterns of climatic variability associated with climate change is likely to reduce the effectiveness of the current coping mechanisms even more and thus increase household vulnerability further. The results reveal that weather shocks have substantial (negative as well as positive) effects on welfare that vary across regions (North vs. Center and South) and socio-economic characteristics (education and gender). The heterogeneous impacts of climatic variability suggest that a "tailored" approach to designing programs aimed at decreasing the sensitivity and increasing the capacity of rural households to adapt to climate change in Mexico is likely to be more effective.
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Do household consumption-smoothing strategies in poor countries entail significant long-run costs in terms of reduced human capital? This paper exploits the timing of monsoon rainfall shocks and the seasonal nature of agriculture to isolate income effects on early childhood anthropometric outcomes in rural Nepal and to provide evidence on the persistence of these effects into later childhood. Findings suggest that a 10 percent increase in rainfall from historic norms during the most recently completed monsoon leads to a 0.15 standard deviation increase in weight-for-age for children ages 0-36 months. This total impact consists of a negative "disease environment effect" of no more than 0.02 standard deviations and a positive "income effect" as high as 0.17 standard deviations. Consistent with this interpretation, excess monsoon rainfall also enhances child stature, but only if the monsoon rainfall shock is experienced in the second year of life. Moreover, this effect on child height is transitory, dissipating completely by age five.
Environmental Economics & Policies --- Global Environment Facility --- Human capital --- Income insurance --- Macroeconomics and Economic Growth --- Malnutrition --- Poverty Reduction --- Science of Climate Change --- Water Conservation --- Youth and Governance
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Carbon pricing is an important instrument in addressing climate change. However, a well-functioning carbon pricing instrument needs a robust framework to quantify GHG emissions (including removals) underpinned by high quality data. This data can help policy makers set the level of a carbon tax (CT) and help regulators track how many emissions allowances companies need to surrender under an Emissions Trading System (ETS). A robust framework will facilitate implementation and enforcement of the rules and increase compliance levels. This report builds on the PMR Guide for Designing Mandatory Greenhouse Gas Reporting Programs (PMR MRV Guide), which provides a broader overview of establishing an MRV system. This report focuses on the technical detail of quantification protocols, that is, how in practice emissions data can be monitored and quantified for reporting. This report is intended for policy makers and government officials responsible for setting up and implementing emissions quantification protocols as part of the emissions monitoring, reporting, and verification (MRV) systems that support carbon taxes and emissions trading systems.
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This paper examines whether and how rainfall shocks affect tariff setting in the agricultural sector. In a model of strategic trade policy, the authors show that the impact of a negative rainfall shock on optimal import tariffs is generally ambiguous, depending on the weight placed by the domestic policy maker on tariff revenue, profits and the consumer surplus. The more weight placed on domestic profits, the more likely it is that the policy maker will respond to a rainfall shortage by reducing import tariffs. These findings are robust to alternative assumptions about market structure and the timing of the game. Using detailed panel data on applied tariffs and rainfall for 70 nations, the authors find robust evidence that rainfall shortages generally induce policy makers to set lower tariffs on agricultural imports.
Agribusiness --- Agriculture --- Economic Theory & Research --- Free Trade --- International Economics & Trade --- Markets and Market Access --- Optimal tariffs --- Rainfall shocks --- Science of Climate Change --- Strategic trade policy
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Adaptation has long been neglected in the debate and policies surrounding climate change. However, increasing awareness of climate change has led many stakeholders to look for the best way to limit its consequences and has resulted in a large number of initiatives related to adaptation, particularly at the local level. This report proposes a general economic framework to help stakeholders in the public sector to develop effective adaptation strategies. To do so, it lays out the general issues involved in adaptation, including the role of uncertainty and inertia, and the need to consider structural changes in addition to marginal adjustments. Then, it identifies the reasons for legitimate public action in terms of adaptation, and four main domains of action: the production and dissemination of information on climate change and its impacts; the adaptation of standards, regulations and fiscal policies; the required changes in institutions; and direct adaptation actions of governments and local communities in terms of public infrastructure, public buildings and ecosystems. Finally, the report suggests a method to build public adaptation plans and to assess the desirability of possible policies.
Adaptation to Climate Change --- Affiliated Organizations --- Climate Change Economics --- Climate Change Mitigation and Green House Gases --- Economic Performance --- Output --- Policy Environment --- Public Sector Development --- Science of Climate Change --- Structural Adjustment --- Wetlands
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Climate change is believed to represent a serious challenge to poverty reduction efforts around the globe. This paper conducts an up-to-date review of three main strands of the literature analyzing the poverty impacts of climate change : (i) economy-wide growth models incorporating climate change impacts to work out consistent scenarios for how climate change might affect the path of poverty over the next decades; (ii) studies focusing on the poverty impacts of climate change in the agricultural sector; and (iii) studies exploring how past climate variability impacts poverty. The analysis finds that the majority of the estimates of the poverty impacts tend to ignore the effect of aggregate economic growth on poverty and household welfare. The empirical evidence available to date suggests that climate change will slow the pace of global poverty reduction, but the expected poverty impact will be relatively modest and far from reversing the major decline in poverty that is expected to occur over the next 40 years as a result of continued economic growth. The studies focusing on the sector-specific channels of impacts of climate change suggest that the estimated impacts of climate change on agricultural yields are generally a poor predictor of the poverty impacts of climate change at the national level due to heterogeneity in the ability of households to adapt. It also appears that the impacts of climate change are generally regressive, that is, they fall more heavily on the poor than the rich.
Agricultural Yields --- Climate Change --- Climate Change Economics --- Climate Change Mitigation and Green House Gases --- Economic Growth --- Environment --- Household Welfare --- Poverty --- Poverty reduction --- Regional Economic Development --- Rural Poverty Reduction --- Science of Climate Change
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The impacts of climate change on poverty depend on the magnitude of climate change, but also on demographic and socioeconomic trends. An analysis of hundreds of baseline scenarios for future economic development in the absence of climate change in 92 countries shows that the drivers of poverty eradication differ across countries. Two representative scenarios are selected from these hundreds. One scenario is optimistic regarding poverty and is labeled "prosperity;" the other scenario is pessimistic and labeled "poverty." Results from sector analyses of climate change impacts-in agriculture, health, and natural disasters-are introduced in the two scenarios. By 2030, climate change is found to have a significant impact on poverty, especially through higher food prices and reduction of agricultural production in Africa and South Asia, and through health in all regions. But the magnitude of these impacts depends on development choices. In the prosperity scenario with rapid, inclusive, and climate-informed development, climate change increases poverty by between 3 million and 16 million in 2030. The increase in poverty reaches between 35 million and 122 million if development is delayed and less inclusive (the poverty scenario).
Climate change --- Climate change economics --- Development --- Inequalities --- Macroeconomics and economic growth --- Poverty --- Poverty reduction --- Rural poverty reduction --- Scenarios --- Science and technology development --- Science of climate change --- Shared socio-economic pathways --- Uncertainty
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