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Climate Change Impacts and Limited Market-driven Adaptation

Francesco Bosello and Ramiro Parrado ()

Review of Environment, Energy and Economics - Re3, 2014

Abstract: This article addresses one specific criticism that can be raised against economic climate change impact assessments conducted with Computable General Equilibrium (CGE) models: that of overly optimistic assumptions about markets’ ability to react to climate change induced shocks, i.e. market-driven adaptation. These models indeed usually assume frictionless and instantaneous adjustments to a new equilibrium. We demonstrate that these frictions could increase climate change costs from 0.64% to 0.87% of Gross World Product (GWP).

Keywords: Climate Change Costs; Adaptation; Computable General Equilibrium Models (search for similar items in EconPapers)
JEL-codes: C68 Q54 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femre3:2014.09-04

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