Transcript Global Climate Change and its Distributional Impacts Maurizio Bussolo, Rafael de Hoyos, Denis Medvedev and Dominique van der Mensbrugghe The World Bank “Future of the.

Global Climate Change and
its Distributional Impacts
Maurizio Bussolo, Rafael de Hoyos, Denis Medvedev
and Dominique van der Mensbrugghe
The World Bank
“Future of the Global Economy”
11th Annual Conference on Global Economic Analysis
Helsinki, 12-14 June, 2008
ENVISAGE: Model features
• Standard dynamic global CGE.
• Flexible aggregation (regions and sectors) and time frame.
• 2001 GTAP-based base year including IEA-based energy
demand and trade (MTOE) and estimates of CO2 emissions by
sector and fuel (shifting to 2004).
• Integrated climate module with links from emissions to
radiative forcing to temperature change.
• Flexible energy demand system.
• Flexible emissions control—carbon taxes, caps, cap and trade,
demand exemptions.
Energy demand nest
Energy bundle
Electric bundle
Non-electric bundle
Existing and alternative
technologies
Oil and gas bundle
Coal bundle
Coal and alternative
technologies
Oil bundle
Oil and alternative
technologies
Gas bundle
Gas and alternative
technologies
Three scenarios
• Baseline, or business-as-usual, with climate change damages
• Baseline without climate change damages.
• Global mitigation scenario—targetting 500 ppm concentration
by 2050
Key baseline assumptions
• UN population forecast—labor force growth equated to
growth of working age population (15-65).
• Savings rate driven by growth and youth and elderly
dependency rates.
• Trend productivity in agriculture is exogenous (2.5% per
annum), with temperature-based damage function.
• Productivity in manufacturing is higher than in services (2%).
• Productivity is calibrated through 2015 and then fixed.
• Autonomous energy efficiency improvement (AEEI) increases
by 1% per annum (in all regions and sectors).
• Capital account is exogenous.
Baseline GDP
8
160
Developing growth rate, left-axis
7
140
6
120
5
100
4
80
High-income growth rate, left-axis
3
60
2
40
1
20
0
0
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Developed, right-axis
Source: Simulations with World Bank’s ENVISAGE model.
$2001 trillion
Percent per annum
Developing, right-axis
Baseline Emissions
4.0
40
World growth rate, left-axis
3.5
35
3.0
30
2.5
25
2.0
20
1.5
15
1.0
10
0.5
5
0.0
0
GtC
Percent per annum
Developing, right-axis
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Source: Simulations with World Bank’s ENVISAGE model.
High-income, right-axis
Concentration, forcing and temperature
6
500
5
Concrentation ppm
Concentration
Forcing
400
4
300
3
200
2
Temperature
100
1
0
0
2001
2010
2020
2030
2040
2050
Radiative forcing (W/m2) and temperature (°C)
600
Impacts of Climate Change
Real income, difference from baseline with no damage, trillions of 2001US$
0.0
-0.2
-0.4
Other developing
India
China
High income
-0.6
-0.8
-1.0
-1.2
-1.4
-1.6
-1.8
-2.0
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Impacts of Climate Change
Real income, perce nt difference from baseline with no damage in 2050
India
China
Other LAC energy exporters
Sub Saharan Africa
Rest of developing East Asia
Rest of South Asia
MENA Energy exporters
Rest of Europe and Central Asia
Rest of LAC
Russia
Brazil
Indonesia and Malaysia
EU 27 and EFTA
Rest of high income
Japan
United States
Rest of MENA
Canada
-7
-6
-5
-4
-3
-2
-1
0
1
2
Climate change damages and food imports
Perce nt difference in nominal food imports in 2050 relative to baseline
India
Rest of South Asia
Sub Saharan Africa
Rest of developing East Asia
Other LAC energy exporters
Rest of LAC
Indonesia and Malaysia
Rest of MENA
MENA Energy exporters
Canada
Rest of Europe and Central Asia
Rest of high income
Russia
China
EU 27 and EFTA
Brazil
United States
Japan
-50
-40
-30
-20
-10
0
10
Percent reduction in emissions
Perce nt reduction in CO2 emissions relative to baseline in 2050
China
India
World total
Rest of Europe and Central Asia
Rest of LAC
Rest of developing East Asia
United States
Russia
Rest of high income
Canada
MENA Energy exporters
Indonesia and Malaysia
Rest of South Asia
Sub Saharan Africa
EU 27 and EFTA
Rest of MENA
Other LAC energy exporters
Japan
Brazil
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
$93 per ton of carbon in 2050
Real income losses/gains from mitigation
Perce nt change in real income relative to baseline in 2050
India
China
Other LAC energy exporters
Climate change damages
Sub Saharan Africa
Rest of developing East Asia
Mitigation
Rest of South Asia
MENA Energy exporters
Rest of Europe and Central Asia
Rest of LAC
Russia
Brazil
Indonesia and Malaysia
EU 27 and EFTA
Rest of high income
Japan
United States
Rest of MENA
Canada
-8
-6
-4
-2
0
2
4
Density of log(household per capita income or
consumption, 1993 PPP)
Global income distribution
0.5
Observed (2000)
BaU (2050)
BaUnd (2050)
0.4
0.4
0.3
0.3
0.2
0.2
0.1
0.1
0.0
0
Note:
Source:
2
4
BaU = baseline, BaUnd = baseline with no damages.
Simulations with World Bank’s GIDD model.
6
8
10
Climate change impacts on poverty
Percent of total number of poor
100
80
60
40
Poor in agriculture
Poor in non-agriculture
20
0
2000
Note:
Source:
BaU, 2050
BaUnd, 2050
GBL, 2050
BaU = baseline, BaUnd = baseline with no damages, GBL = global mitigation scenario.
Simulations with World Bank’s GIDD model.
Growth incidence of climate damages and mitigation
Percentage change in real income or consumption
20
No damages from climate change
Global mitigation via uniform tax
15
10
5
0
-5
0
Source:
20
40
Simulations with World Bank’s GIDD model.
60
80
100
Incidence of damages from climate change
Composition of 10 percent of global population most affected by climate change
Non-agricultural households in Eastern
Europe and Central Asia
Agricultural households in Latin
America and the Caribbean
Non-agricultural households in Latin
America and the Caribbean
Agricultural households in South Asia
Non-agricultural households in South
Asia
Source:
Simulations with World Bank’s GIDD model.
Take away messages
• Standard SRES ‘worse case’ baseline scenarios are too
optimistic
• Staying at 550 ppm will require a major effort
• Negative effects from climate change on agricultural output
will be significant with income, trade and poverty impacts
• No major cost from ‘modest’ mitigation efforts
• Poor are hardest hit from climate change
• Caveats -- many