Climate change economics in Vietnam: Redefining economic impact

Christian Otto, Christoph Schult and Thomas Vogt

No 15/2025, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: Vietnam, a lower-middle-income economy, faces severe climate risks from heat waves, sea-level rise, and tropical cyclones, which are expected to intensify under ongoing global warming. Using a dynamic general equilibrium model, we analyze economic transition dynamics from 2015 to 2100, incorporating heat-induced labor productivity losses, agricultural land loss, and cyclone-related property damage. We compare a Paris-compatible scenario limiting warming to below 2 êC with a high-emission scenario reaching 4-5 êC. While output and investment impacts remain highly uncertain and statistically indistinguishable across scenarios until 2100, consumption losses are significantly larger under high emissions, mainly driven by heat-related productivity declines, with cyclones contributing most to uncertainty. These findings underscore the importance of considering multiple impact channels beyond output damages in climate-development research.

Keywords: climate change impacts; dynamic general equilibrium model; impact channels; mitigation (search for similar items in EconPapers)
JEL-codes: O44 Q13 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:325836

DOI: 10.18717/dpzggv-cs12

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