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GTAP Resources: Resource Display

GTAP Resource #6837

"Estimating the economic stranded value from climate change physical risks using sector-specific capital and investments in a CGE model"
by Parrado, Ramiro, Benedetta Falsetti, Emanuele Campiglio and Francesco Bosello


Abstract
Understanding the risks of climate change is of paramount importance given its widespread effects and impacts. On one hand, there are direct consequences which materialize due to the actual physical damages due to slow onset impacts, or also due to sudden extreme events. On the other hand, there are indirect effects derived either from the ripple effects of the abovementioned damages that propagate trough space and time, or even from actions taken to reduce global warming. Consequently, these climate change-related risks can be of two types. The first one refers to a climate change physical risk, i.e., impacts such as droughts, floods, or rising sea levels, which can directly impact physical assets with indirect consequences on the global supply chain. The second one is related to a transition risk, i.e., the introduction of climate policies to transform the system into a low-carbon economy. Both risks expose the overall economic and financial system to adjustments that should be taken into account for future projections not only for policy design but also for business planning and for harnessing the synergies of a low-carbon transition while at the same time dealing with the adverse consequences of global warming.

The objective of this paper is to assess stranded values and assets due to physical impacts of climate change as opposed to considering only transition risks, and therefore add an additional piece of information to the stranded value assessment literature. This is important since investment decisions depend on both transition and physical risks of climate change. For this purpose, the study uses a Computable General Equilibrium (CGE) model extended with sector-specific investments and sector-specific capital to provide an improved assessment of stranded values considering a set of climate change impacts such as agriculture, sea-level rise, riverine floods, energy demand, and labor productivity.


Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Version:
Created: Parrado, R. (4/11/2023)
Updated: Parrado, R. (4/11/2023)
Visits: 383
- Model extension/development
- Climate impacts
- GTAP Data Base and extensions


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