Economic consequences of climate change

The DYNAMIC (Dynamic feedbacks of climate impacts on current adaptation and mitigation investment choice) project developed and tested a new framework for estimating the impacts of climate change on various sectors of the economy at the global scale. The process involved the creation of a database of relevant climate change impacts and responses.

The project's ultimate aim was develop new impact assessments capable of being incorporated into the integrated assessment models used in climate policy analysis. Researchers characterised climate change damages within different sectors considering mitigation and adaptation responses. They found that the agriculture and energy sectors had the most data available to allow response modelling for a large number of countries.

Team members were then able to estimate the response of cereal productivity in tropical and temperate regions to global rain and temperature variations. They also looked into cereal exposure and vulnerability, and the different responses of irrigated versus rainfed grains.

One output of the project's work in the agricultural sector was a database of productivity shocks for different warming scenarios up to 2050. It covered 163 countries and 7 cereals (irrigated wheat, rainfed wheat, irrigated rice, rainfed rice, irrigated maize, rainfed maize and rainfed sorghum).

For the energy sector, researchers assessed climate change impacts on the energy demand from different economic sectors (residential, industrial, commercial, agricultural) and on the energy supply from hydropower. Here, the focus was on temperature, humidity and, in the study on hydroelectricity, on extreme events such as droughts beside changes in runoff.

DYNAMIC is expected to have a significant impact because it will develop a roadmap for future research on the economics of climate change impacts and adaptation. The project will initiate a process that is ultimately aimed at determining the global damage-adaptation-mitigation relationship, but at the sector level (for example, agriculture and energy).

The main beneficiary from this research is the integrated assessment modelling community. This is because DYNAMIC's ultimate objective is to develop improved estimates of impacts and adaptation, which can be used to inform climate policy analysis and decision makers. The framework will also pave the way for the development of vulnerability maps, thereby directly informing policymakers and practitioners of climate change mitigation.