Computable general equilibrium analyses of global economic impacts and adaptation for climate change: the case of tropical cyclones

Abstract

Computable general equilibrium models have been widely used for simulating global warming and evaluating economic damages caused by climate change. However, to date little research has focused on the economic consequences incurred across several industry sectors at a global level. This article uses the evaluation model for environmental damage and adaptation (EMEDA) to simulate direct economic damages caused by tropical cyclones and losses that are offset through growth in other sectors to measure the global economic impacts arising from climate change. Simulated results by EMEDA indicate that: 1) several regions experience economic growth, with four regions offsetting economic damages in the primary industry sector whilst the other regions increase their damages; 2) seven regions show economic growth whilst only North America neutralises damage in their secondary sectors, with the other regions revealing more severe losses; 3) several regions are able to offset their tertiary sector losses yet the other regions show an increase in damages; 4) the equivalent variation in all regions except East Asia decreases as temperature increases.