Assessing macro-economic effects of climate impacts on energy demand in EU Sub-national regions

Standardi, Gabriele, Dasgupta, Shouro, Parrado, Ramiro, De Cian, Enrica and Bosello, Francesco (2023) Assessing macro-economic effects of climate impacts on energy demand in EU Sub-national regions. Environmental and Resource Economics, 86 (1-2). 173 - 201. ISSN 0924-6460

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Abstract

European policy makers are increasingly interested in higher spatial representations of future macro-economic consequences from climate-induced shifts in the energy demand. Indeed, EU sub-national level analyses are currently missing in the literature. In this paper, we conduct a macro-economic assessment of the climate change impacts on energy demand at the EU sub-national level by considering twelve types of energy demand impacts, which refer to three carriers (petroleum, gas, and electricity) and four sectors (agriculture, industry, services, and residential). These impacts have been estimated using climatic data at a high spatial resolution across nine Shared Socioeconomic Pathway (SSP) and Representative Concentration Pathway (RCP) combinations. The impacts feed into a Computable General Equilibrium model, whose regional coverage has been extended to the sub-national NUTS2 and NUTS1 level. Results show that negative macroeconomic effects are not negligible in regions located in Southern Europe mainly driven by increased energy demand for cooling. By 2070, we find negative effects larger than 1% of GDP, especially in SSP5-RCP8.5 and SSP3-RCP4.5 with a maximum of − 7.5% in Cyprus. Regarding regional differences, we identify economic patterns of winners and losers between Northern and Southern Europe. Contrasting scenario combinations, we find that mitigation reduces adverse macro-economic effects for Europe up to a factor of ten in 2070, from 0.4% GDP loss in SSP5-RCP8.5 to 0.04% in SSP2-RCP2.6.

Item Type:	Article
Additional Information:	© 2023, The Author(s), under exclusive licence to Springer Nature B.V.
Divisions:	Grantham Research Institute
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences
Date Deposited:	19 Jul 2023 13:51
Last Modified:	25 Apr 2024 17:30
URI:	http://eprints.lse.ac.uk/id/eprint/119766

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