Abstract
Climate change will have considerable impact on the global economy. Estimates of the economic damages due to climate change have focused on the effect of average temperature, but not the effect of other important climate variables. Related research has not explored the sub-annual economic cycles which may be impacted by climate volatility. To address these deficits, we propose a flexible, non-linear framework which includes a wide range of climate variables to estimate changes in GDP and project sub-annual economic cycle adjustments (period, amplitude, trough depth). We find that the inclusion of a more robust set of climate variables improves model performance by over 20%. Importantly, the improved model predicts an increase in GDP rather than a decrease when only temperature is considered. We also find that climate influences the sub-annual economics of all but one province in Canada. Highest stressed were the Prairie and Atlantic regions. Least stressed was the Southeastern region. Our study advances understanding of the nuances in the relationship between climate change and economic output in Canada. It also provides a method that can be applied to related economies globally to target adaptation and resilience management.
Highlights
Climate change will have considerable impact on the global economy
We reveal sub-annual economic cycle changes across geographic regions, with particular focus on changes in cycle length, amplitude, and trough depth, as these contribute to financial stability
As a northern temperate economy, Canada faces complex climate change caused by disproportionate warming[23] and a longitudinal and latitudinal breadth that experiences a range of climate variability[24,25]
Summary
Climate change will have considerable impact on the global economy. Estimates of the economic damages due to climate change have focused on the effect of average temperature, but not the effect of other important climate variables. Related research has not explored the sub-annual economic cycles which may be impacted by climate volatility. Research has focused on understanding the interaction between climate change and the global economy[1,2,3,4]. There is increased interest from government and financial institutions to incorporate climatic risk into adaptation and resilience management at the local, regional, and national level[14,15]. We reveal sub-annual economic cycle changes across geographic regions, with particular focus on changes in cycle length, amplitude, and trough depth, as these contribute to financial stability. As a northern temperate economy, Canada faces complex climate change caused by disproportionate warming (i.e. warming more than double the global average)[23] and a longitudinal and latitudinal breadth that experiences a range of climate variability[24,25]. Our study advances understanding of the impacts of climate change on economies and offers insights to guide research and policy development, in other northern temperate economies
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