Economic models of climate change: systematic review of benefits, limitations, and future directions

Abstract

Climate change substantially impacts the community's livelihood, affecting their socioeconomic status. Considering the severity of impacts in the developing country context, economic models have been identified as a feasible application to determine the socioeconomic impacts of climate change. Consequently, this study provides benefits, limitations and future directions of economic models, which can be used as guidance to apply the economic models to determine the community impacts of climate change and thereby contribute to sustainable development. A systematic literature review has been adapted as a methodology to identify 18 benefits and 14 limitations of economic models of climate change. In addition, 18 future directions for applying and improving economic models of climate change have been derived. Benefits are mainly associated with the financial and decision-making aspects, while the limitations highly encounter due to possibility of producing misleading results and uncertainty. Future directions of economic modelling of climate change mainly concentrate on modelling for uncertainty and integrating multiple climatic conditions, livelihood status, models, technologies, and stakeholders in economic modelling. The findings are helpful for policymakers to successfully apply the economic models to address the climate change issues in the community. Further, the community will ultimately benefit from the set of policies and management strategies that occurred with the guidance of these findings. Further research can be conducted on addressing the identified limitations of the economic models and developing them.