Macroeconomic Impact of Climate Damage in France

Florian Jacquetin and Gaël Callonnec

Economie et Statistique / Economics and Statistics, 2024, issue 543, 39-64

Abstract: [eng] In order to assess the economic cost of climate inaction, we introduce the cost of the damage into the “ThreeME” macroeconomic model devised by ADEME (the French Agency for Ecological Transition). The traditional “Keynesian” framework of the model has been modified to take into account the risks weighing on certain sectors (agriculture and electricity) that would lead to pressures causing reductions in their productivity. The damage includes not only chronic risks resulting from gradual changes, but also acute risks resulting from high intensity events of short duration, such as natural disasters. This damage is introduced in a “bottom-up” approach, i.e. at the level of both the supply and the demand of the stakeholders concerned. According to the simulations, compared to an anticipated and planned transition limiting global warming to 1.5°C by 2100, climate inaction could cost France almost 7 points of annual GDP by 2100.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nse:ecosta:ecostat_2024_543_3

DOI: 10.24187/ecostat.2024.543.2118

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