Impacts of Global Warming on Regional Energy and Economy: Uneven consequences arising from global warming-induced heating and cooling demand of households

Abstract

The impacts of global warming vary across regions. This paper studies the distributional implications of global warming impacts on household energy use for heating and cooling and the induced macroeconomic responses under different scenarios. Our research updates the direct impact of global warming on household energy demand in 140 regions worldwide by utilizing existing estimations of damage functions related to temperature changes. Subsequently, the updated direct impact is used in a global static computable general equilibrium (CGE) model to evaluate the macroeconomic responses. We find that at the global level, the market effects cause a reduction in the direct impact on the demand for oil and gas, while that for electricity displays a positive but moderate growth. Whereas the regional effects vary across countries and lead to changes in both directions, in which the autonomous adaptation embodied in the global market plays a vital role. Furthermore, we find strong inequality in the socioeconomic responses to global warming across regions. Notably, low-income countries are most strongly affected by increased primary energy use and decreased gross domestic product (GDP). Disparities in the impacts on carbon-based energy sources yield a near-perfect inequality as per the adjusted Gini index for CO2 emission changes, which potentially intensify the distributional consequences of global climate change.