Publication: The Macroeconomic Implications of Climate Change Impacts and Adaptation Options: A Modeling Approach
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Published
2025-05-29
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Date
2025-05-29
Author(s)
Abalo, Kodzovi
Boehlert, Brent
Bui, Thanh
Burns, Andrew
Castillo, Diego
Chewpreecha, Unnada
Haider, Alexander
Jooste, Charl
McIsaac, Florent
Editor(s)
Abstract
Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
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“Abalo, Kodzovi; Boehlert, Brent; Bui, Thanh; Burns, Andrew; Castillo, Diego; Chewpreecha, Unnada; Haider, Alexander; Hallegatte, Stephane; Jooste, Charl; McIsaac, Florent; Ruberl, Heather; Smet, Kim; Strzepek, Ken. 2025. The Macroeconomic Implications of Climate Change Impacts and Adaptation Options: A Modeling Approach. Policy Research Working Paper; 11133. © World Bank. http://hdl.handle.net/10986/43258 License: CC BY 3.0 IGO.”
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