The Expected Effects of Climate Change on Colombia’s Current Account

Camila Agudelo-Rivera, Clark Granger and Andres Sanchez-Jabba

Borradores de Economia from Banco de la Republica de Colombia

Abstract: This study analyzes the expected effects of climate change on Colombia’s current account. To this end, we present a literature review that outlines how climate-related risks could impact the balance of payments, complemented with an analysis that illustrates how the 2014-2015 oil shock affected the country's external sector. Subsequently, we show a projection of the current account balance through 2050 under different climate scenarios in order to establish whether the incidence of these risks would affect the country’s long-run current account. Our results indicate that achieving net-zero emissions by 2050 could widen the current account deficit, relative to a continuation of current climate policies, by an amount ranging between 2.6% and 4.6% of GDP. RESUMEN: Este estudio muestra los efectos esperados del cambio climático sobre la cuenta corriente en Colombia. Para ello presentamos una revisión de literatura que expone cómo los riesgos asociados con este fenómeno podrían impactar la balanza de pagos, complementando con un análisis que ilustra cómo el choque petrolero de 2014-2015 afectó el sector externo del país. Posteriormente, realizamos una proyección del balance corriente hasta 2050 bajo distintos escenarios climáticos con el objetivo de establecer si la incidencia de estos riesgos afectaría el balance corriente en el largo plazo. Nuestros resultados indican que la consecución de cero emisiones netas podría ampliar el déficit corriente hacia 2050, relativo a una continuidad de las políticas climáticas actuales, en una cantidad que oscilaría entre 2,6% y 4,6% del PIB.

Keywords: Climate change; current account; climate-related risks; fully modified OLS; cambio climático; cuenta corriente; riesgos asociados al cambio climático; mínimos cuadrados totalmente modificados (search for similar items in EconPapers)
JEL-codes: F32 G18 Q51 Q54 (search for similar items in EconPapers)
Pages: 30
Date: 2022-10
New Economics Papers: this item is included in nep-ene and nep-env
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https://doi.org/10.32468/be.1214

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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:1214

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