Abstract
As recent literature has shown climate change impacts result in negative consequences for regional economies. In this study, we test this conclusion for the region of Atlantic Canada. In order to do and present our case study research, we designed economic and statistical models to describe the relationship between economic performance measure, which is regional value added, and two sets of control variables - economic and climate. Statistical model represents a linear multiple regression set in terms of panel data for five regional transportation hubs with autoregressive term for our dependent variable and two sets of control variables. The results obtained from the model estimation show statistically significant negative effect of rising temperature on regional value added: an increase in annual temperature by one degree Celsius causes a decrease in regional value added by 1.74%. In addition, the rise of the sea level by one meter would reduce regional value added by approximately 10% implying that coastal sub-region in Atlantic Canada is highly vulnerable to climate change impacts.
Highlights
It is a fact reported in recent literature and accepted by majority of climate scientists that climate change is happening, and it is being caused by human activity
Temperature was still significant at 5% level with sea level rise significant at 1%. These results show that a one degree Celsius increase in temperature decreases regional value added by 1.25% while a one meter rise in sea level decreases regional value added by 9.9%
In order to identify the economic consequences of climate change impacts, we have used panel data analysis framework
Summary
It is a fact reported in recent literature and accepted by majority of climate scientists that climate change is happening, and it is being caused by human activity. According to the 5th Annual Report of the Intergovernmental Panel on Climate Change [1], these impacts negatively affect ecosystems, economies, human health, and infrastructure. These impacts are highly dependent on geographical, political, and economic characteristics of the area under study. The focus of policy makers is on the development of long lasting adaptation mechanisms and mitigation measures. In this regard, economic evaluation of climate change consequences of climate change impacts has become necessary to justify funding for implementation of adaptation measuresat regional level
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