CICERO - Senter for klimaforskning

Impacts and adaptation to climate change in European economies

Asbjørn Aaheim, Helene Amundsen, Therese Dokken, Taoyuan Wei

This paper evaluates the impacts of climate change to European economies under an increase in global mean temperature at +2 °C and +4 °C. It is based on a summary of conclusions from available studies of how climate change may affect various sectors of the economies in different countries. We apply a macroeconomic general equilibrium model, which integrates impacts of climate change on different activities of the economies. Agents adapt by responding to the changes in market conditions following the climatic changes, thus bringing consistency between economic behaviour and adaptation to climate change. Europe is divided into 85 sub-regions in order to capture climate variability and variations in vulnerabilities within countries. We find that the impacts in the +2 °C are moderate throughout Europe, with positive impacts on GDP in some sub-regions and negative impacts down to 0.1 per cent per year in others. At +4 °C, GDP is negatively affected throughout Europe, and most substantially in the southern parts, where it falls by up to 0.7 per cent per year in some sub-regions. We also find that climate change causes differentiations in wages across Europe, which may cause migration from southern parts of Europe to northern parts, especially to the Nordic countries.

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