Estimating a Climate Change Damage Function through General Equilibrium Modeling

23 Pages Posted: 16 Jul 2007

See all articles by Francesco Bosello

Francesco Bosello

University of Milan - Department of Economics, Business and Statistics; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia; Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy; Loyola Andalucia University

Date Written: July 2007

Abstract

A Climate Change Damage Function (CCDF) is a reduced form relationship linking macroeconomic aggregates (e.g., potential GDP) to climate indicators (e.g., average temperature levels). This function is used in a variety of studies about climate change impacts and policy analysis. However, despite the fact that this function is key in determining results in many integrated assessment models, it is not typically calibrated in a consistent and rigorous way.

This paper presents a novel approach, in which several different impacts of climate change are first assessed by means of a full-fledged computable general equilibrium model of the world economy, then results are interpolated to get a simple relationship of the CCDF type. The estimated CCDF is compared with other popular functions used in the literature, to highlight the possible implications associated with the alternative adoption of this functional relationship.

Keywords: Climate Change, Damage Function, Integrated Assessment, General Equilibrium

JEL Classification: C68, D58, F18, Q51, Q54

Suggested Citation

Bosello, Francesco and Roson, Roberto, Estimating a Climate Change Damage Function through General Equilibrium Modeling (July 2007). Department of Economics, University Ca' Foscari of Venice Research Paper No. 08-07, Available at SSRN: https://ssrn.com/abstract=1000839 or http://dx.doi.org/10.2139/ssrn.1000839

Francesco Bosello (Contact Author)

University of Milan - Department of Economics, Business and Statistics

Via Festa del Perdono, 7
Milan, 20122
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy
+39 041 2349147 (Phone)
+39 041 2349176 (Fax)

HOME PAGE: http://venus.unive.it/roson

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

viale Filippetti, 9
Milan, 20122
Italy

Loyola Andalucia University ( email )

Escritor Castilla Aguayo no. 4
Cordoba, CORDOBA 14004
Spain

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