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The economic impact of climate change in the 20th and 21st centuries

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Abstract

The national version of FUND3.6 is used to backcast the impacts of climate change to the 20th century and extrapolate to the 21st century. Carbon dioxide fertilization of crops and reduced energy demand for heating are the main positive impacts. Climate change had a negative effect on water resources and, in most years, human health. Most countries benefitted from climate change until 1980, but after that the trend is negative for poor countries and positive for rich countries. The global average impact was positive in the 20th century. In the 21st century, impacts turn negative in most countries, rich and poor. Energy demand, water resources, biodiversity and sea level rise are the main negative impacts; the impacts of climate change on human health and agriculture remain positive until 2100.

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Notes

  1. http://earthtrends.wri.org/

  2. http://www.cru.uea.ac.uk/cru/data/temperature/

  3. http://cdiac.ornl.gov/trends/co2/contents.htm

  4. Water is a necessary good. The assumed income elasticity is 0.85, that is, a 10 % increase in per capita income leads to an 8.5 % increase in the per capita value of water.

  5. Note that Figure 2 shows the worst off and best off countries at each point in time, rather than the worst off and best off countries averaged over the centuries.

  6. National impacts are weighted with the ratio of world average per capita income and national per capita income. This corresponds to a logarithmic function for individual utility and utilitarian social welfare (Fankhauser et al. 1997).

  7. Infrapolation is extrapolation to the past.

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Acknowledgments

I am grateful to the Copenhagen Consensus Center and the EU ClimateCost project for financially supporting this research. Two anonymous referees had excellent comments.

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Correspondence to Richard S. J. Tol.

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Tol, R.S.J. The economic impact of climate change in the 20th and 21st centuries. Climatic Change 117, 795–808 (2013). https://doi.org/10.1007/s10584-012-0613-3

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