Economic Impact of Energy Consumption Change Caused by Global Warming

Peter A. Lang and Kenneth B. Gregory
Additional contact information
Peter A. Lang: Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, Australian National University, Canberra, ACT 2601, Australia
Kenneth B. Gregory: P.Eng. (Non-Practicing), Life Member of The Association of Professional Engineers and Geoscientists of Alberta (APEGA), 1500 Scotia One, 10060 Jasper Avenue NW, Edmonton, AB T5J 4A2, Canada

Energies, 2019, vol. 12, issue 18, 1-29

Abstract: This paper tests the validity of the FUND model’s energy impact functions, and the hypothesis that global warming of 2 °C or more above pre-industrial times would negatively impact the global economy. Empirical data of energy expenditure and average temperatures of the US states and census divisions are compared with projections using the energy impact functions with non-temperature drivers held constant at their 2010 values. The empirical data indicates that energy expenditure decreases as temperatures increase, suggesting that global warming, by itself, may reduce US energy expenditure and thereby have a positive impact on US economic growth. These findings are then compared with FUND energy impact projections for the world at 3 °C of global warming from 2000. The comparisons suggest that warming, by itself, may reduce global energy consumption. If these findings are correct, and if FUND projections for the non-energy impact sectors are valid, 3 °C of global warming from 2000 would increase global economic growth. In this case, the hypothesis is false and policies to reduce global warming are detrimental to the global economy. We recommend the FUND energy impact functions be modified and recalibrated against best available empirical data. Our analysis and conclusions warrant further investigation.

Keywords: economic impacts; global warming; climate change; energy consumption; empirical data; impact function; damage function; FUND (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/1996-1073/12/18/3575/pdf (application/pdf)
https://www.mdpi.com/1996-1073/12/18/3575/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:12:y:2019:i:18:p:3575-:d:268500

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().