The climate and adaptation spatial general equilibrium model (OECD-CASGEM): the macroeconomic cost of climate change 6

1. Introduction 6

2. Estimation of local climate damages (Module I) 10

  2.1. Flooding and the capital stock 11

  2.2. Heat stress and productivity 11

  2.3. Changes in agro-climatic conditions and agricultural productivity 12

  2.4. Sea level rise and land loss 13

3. Climate projections and calibrating climate impacts (Module II) 14

  3.1. Climate projections 14

  3.2. Calibration of climate impacts 19

4. The climate and adaptation spatial general equilibrium model: OECD-CASGEM (Module III) 22

  4.1. Overview 22

  4.2. Model calibration 25

5. Quantitative results 27

  5.1. The macroeconomic impact of climate change 28

  5.2. The role of economic linkages in transmitting climate shocks 31

  5.3. The role of adjustment: how trade and labour mobility shape the distribution of global losses 34

6. Discussion and policy implications 37

References 40

Annex A. Additional tables and figures 44

Annex B. Further detail: Flood firm-level analysis 58

  Regression specification 58

  Results 59

Annex C. Further detail: impact of heat stress on firm productivity 61

  Regression specification 61

  Results 62

Annex D. Further detail: projections of future flood damages 64

Annex E. Model description, equilibrium, calibration, and counterfactuals 67

  Model Description 67

  Equilibrium conditions 71

  Calibration of baseline model 73

  Data sources 73

  Counterfactual simulations 81

Annex F. Further results on quantitative analysis: Impact on population 84