Our Common Future Under Climate Change

International Scientific Conference 7-10 JULY 2015 Paris, France

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Wednesday 8 July - 17:30-19:00 UPMC Jussieu - ROOM 201 - Block 24/34

3322 (b) - Development of pathways: their mix of endogenous and exogenous uncertainties and their future under a changing climate

Parallel Session

Chair(s): M. Fleurbaey (Princeton University, Princeton, United States of America)

Lead Convener(s): N. Nakicenovic (International Institute for Applied Systems Analysis, Laxenburg, Austria), J.C. Hourcade (International Research Center on Environment and Development (CIRED), Paris, France)

Convener(s): S. Dasgupta (Fondazione Eni Enrico Mattei (FEEM), Venezia, Italy), M. Labriet (Eneris Environment Energy Consultants, Madrid, Spain), K. Steininger (University of Graz, Graz, Austria)

17:30

Keynote Speaker

M. Fleurbaey (Princeton University, Princeton, United States of America)

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Keynote Speaker
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17:40

Modelling Efficient and Equitable Scenarios for a Carbon Constrained World with TIAM-MACRO

S. Kypreos (Honorary Senior Scientist of Paul Scherrer Institut, Villigen, PSI, Switzerland), J. Glynn (UCC, Cork, Ireland), B. O Gallachoir (UCC, Cork, Ireland), M. Gargiulo (E4SMA, Turin, Italy), A. Lehtila (VTT, Espoo, Finland)

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Modelling Efficient and Equitable Scenarios for a Carbon Constrained World with TIAM-MACRO

S. Kypreos (1) ; J. Glynn (2) ; B. O Gallachoir (2) ; M. Gargiulo (3) ; A. Lehtila (4)
(1) Honorary Senior Scientist of Paul Scherrer Institut, LEA, Villigen, PSI, Switzerland; (2) UCC, Cork, Ireland; (3) E4SMA, Turin, Italy; (4) VTT, Espoo, Finland

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We generate efficient climate change mitigation scenarios of low emission pathways for carbon dioxide and other greenhouse gases (GHGs) such that global warming remains below 2 °C with high probabilities. Then, we balance the cost of mitigation for different world regions based on equity principles and fairness. The study assumes early mitigation actions starting already in 2020 and quantifies the market penetration of carbon-free technologies, the emission pathways and the economic costs for an efficient reduction of GHGs emissions. The prerequisite is that the CO2 equivalent concentration will remain similar to the present levels while the temperature rise will stay below 2 °C of warming. The associated budget of Remaining Carbon Equivalent Emissions Quotas (RCEEQ) is 273 GtC for CO2 plus another 180 GtC-eq. for other GHGs, valid from the period 2020 onwards, and is imposed as constraint. This value of RCEEQ is in accordance with the Summary Report for Policy Makers of the 5th Assessment report (5AR) of the UN Framework Convention on Climate Change.

Then, we evaluate interregional capital transfers originated from the industrialized world to support mitigation efforts of low income regions to ensure their participation to a binding agreement. Interregional equity transfers are established via a market of emission permits and are presented for different distribution rules concerning the initial endowments of permits. This refers to the effort-sharing or the resource-sharing regimes. Another option considered in the analysis is the introduction of interregional capital transfers in financing a huge joint implementation program covering fully the extra cost of a carbon-free energy system of developing countries up to a stage of full compensation of the economic losses for low income regions.

As all world regions profit from the reduction of damages under the RCEEQ constraint, it makes also sense to estimate the associated regional benefits and to compensate regions for their mitigation cost net of benefits. This capital transfers could take place with the help of burden sharing and emissions trade schemes or through join implementation projects. Therefore, the study undertakes a sensitivity analysis where a) different degrees of cumulative RCEEQ constraints are assumed to differentiate on the needed capital transfers that assure fairness and equity b) different allocation schemes apply while in the case of full compensation we consider  the needed capital transfer net of damages and finally c) a scenario of late  actions under the same RCEEQ constraints is introduced to investigate potential advantages and disadvantages in terms of regional GDP impacts and the timely restricted overshooting of temperature change.  Finally we conclude on scenarios and compensation schemes that allow to define a well-balanced set of regional impacts.

This generation of efficient and equitable scenarios became possible using the Integrated Assessment Model TIAM-MACRO, a technology rich, hybrid general equilibrium model integrating a full scale bottom-up engineering model with macroeconomic top-down models that allows for international trade, developed for the IEA-ETSAP community (Energy Technology Systems Analysis Program www.iea-etsap.org).  The model addresses the key concern for all parties of international climate negotiations which is the national economic effect of implementing climate mitigation targets and tries to define fairness in implementing early actions mitigating global warming. Coupling technology rich energy models, such as MARKAL/TIMES and economic models gives additional insight into interregional competition, trade, industrial delocalization and overall economic consequences of decarbonizing the energy system.      

                            

17:50

Bottom-up Economic Climate Change Impacts at the National Level: Known Trends, Unknown Tails, and Unknowables

K. Steininger (University of Graz, Graz, Austria), G. Wagner (Environmental Defense Fund, Boston, United States of America), P. Watkiss (Paul Watkiss Associates, Oxford, United Kingdom), M. Koenig (Environment Agency Austria, Vienna, Austria)

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Bottom-up Economic Climate Change Impacts at the National Level: Known Trends, Unknown Tails, and Unknowables

K. Steininger (1) ; G. Wagner (2) ; P. Watkiss (3) ; M. Koenig (4)
(1) University of Graz, Graz, Austria; (2) Environmental Defense Fund, Boston, United States of America; (3) Paul Watkiss Associates, Oxford, United Kingdom; (4) Environment Agency Austria, Vienna, Austria

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Economists attempting to evaluate the impacts of climate change are often caught between hard theory and exceedingly rocky empirics. Impact assessment models are necessarily based on highly aggregated – and sometimes highly simplified – damage functions. This study takes an alternative approach: a bottom-up, physical impact assessment and respective monetization, attempting to cover a much broader set of impact fields, feeding directly into a macroeconomic and welfare analysis at the national level. To ensure consistency, our approach applies impact assessment at the sectoral impact chain level using shared socioeconomic pathways, consistent climate scenarios, computable general equilibrium evaluation, and non-market impact evaluation. The approach is applied to assess a broad scope of climate impacts in Austria. Results indicate significant impacts around ‘known knowns’ (such as changes in agricultural yield from climatic shifts), with uncertainty increased by ‘known unknowns’ (e.g. changes in water availability for irrigation, changes in pest and diseases) but also raises the question of  unknowns and unknowables, which may possibly dominate future impacts (such as exceedance of critical ecosystem function for supporting agriculture). Climate change, ultimately, is a risk management problem, where insurance thinking warrants significant mitigation (and adaptation) action today.

Analysis of the study result indicate that the current welfare damage of climate and weather induced extreme events in Austria is an annual average of € 1 billion (large events only). This has the potential to rise to € 4 to 5 billion by mid-century (annual average, known knowns of impact chains only), with an uncertainty range of € 4 to 9 billion. When extreme events and the tails of their distribution are included, even for a partial analysis focused on extremes, damages are seen to rise significantly, e.g. with an estimated increase to € 40 billion due to riverine flooding events alone by the end of the century. These highlight the need to consider the distribution of impacts, as well as the central values.

18:00

Economics of flood risk in Italy under current and future climate

L. Carrera (FEEM - Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change, Venice, Italy), G. Standardi (FEEM - Fondazione ENI Enrico Mattei, Venice, Italy), E. Koks (Institute for Environmental Studies, VU University Amsterdam, Amsterdam, Netherlands), L. Feyen, (JRC, Ispra, Italy), J. Mysiak (FEEM - Fondazione Eni Enrico Mattei, Venice, Italy), J. Aerts (VU University Amsterdam, Amsterdam, Netherlands), F. Bosello (University of Milan, FEEM, and CMCC, Milan, Italy)

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Economics of flood risk in Italy under current and future climate

L. Carrera (1) ; G. Standardi (2) ; E. Koks (3) ; L. Feyen, (4) ; J. Mysiak (2) ; J. Aerts (5) ; F. Bosello (6)
(1) FEEM - Fondazione Eni Enrico Mattei and Euro-Mediterranean Center on Climate Change, Venice, Italy; (2) FEEM - Fondazione ENI Enrico Mattei, Venice, Italy; (3) Institute for Environmental Studies, VU University Amsterdam, Amsterdam, Netherlands; (4) JRC, Ispra, Italy; (5) VU University Amsterdam, IVM, Amsterdam, Netherlands; (6) University of Milan, FEEM, and CMCC, Dep. of economics, Milan, Italy

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We estimate current and future economic impacts of fluvial flood risk in Italy in view of  climate change under a business-as-usual emissions scenario. The methodology combines a high resolution spatial flood hazard and exposure analysis for an ensemble of climate projections with a regionally-calibrated version of a global Computable General Equilibrium (CGE) model. The economic effects, output losses, are estimated per region in terms of Gross Regional Product change till 2100. Losses are estimated for two disaster risk management scenarios: with and without adaptation to changing flood conditions. Our results show that in Italy, because of climate change, current aggregated ensemble-average Expected Annual Output Losses increase fourfold without adaptation, exceeding 600 million Euro per year by the end of the century. With adaptation the increase is limited to 7 percent. The paper provides the distribution of adaptation benefits across regions, of which the cumulative value exceeds 23 billion Euro over the long term (2014-2100).

18:10

Development of pathways: their mix of endogenous and exogenous uncertainties and their future under a changing climate

M. Aglietta (Research and Expertise on the World Economy (CEPII), Paris, France)

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Development of pathways: their mix of endogenous and exogenous uncertainties and their future under a changing climate
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18:20

CIECIA: A New Climate Change Economic IAM and its Assessment of Global Cooperating Abatement Schemes

Z. Wang (Institute of Policy and Management, Chinese Academy of Sciences, Beijing, China), G. Gu (East China Normal University, Shanghai, China), J. Wu (Institute of Policy and Management, Chinese Academy of Sciences, Beijing, China), C. Liu (Institute of Policy and Management, Chinese Academy of Sciences, Beijing, China)

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CIECIA: A New Climate Change Economic IAM and its Assessment of Global Cooperating Abatement Schemes

Z. Wang (1) ; G. Gu (2) ; J. Wu (1) ; C. Liu (1)
(1) Institute of Policy and Management, Chinese Academy of Sciences, Beijing, China; (2) East China Normal University, Shanghai, China

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 From the perspective of global economic general equilibrium, this study developed a new climate change IAM named CIECIA. The economic core of this IAM is a multi-country-sector general equilibrium model. The endogenous technology progress mode is introduced into CIECIA. Based on this IAM, three assessment principles of global cooperating abatement scheme, including effectiveness, feasibility, and fairness are presented. This study simulated and analyzed 6 kind of main global cooperating abatement schemes. The simulated results indicate that all the selected schemes can satisfy the climate protect target to 2100. Thus, they are all effective schemes. However, the schemes have quite different feasibilities and fairness. The Stern Scheme benefits the developed countries, but is unfair to the developing countries. The Nordhaus Scheme promotes the economy of developing countries. However, it will have negative impact on the benefits of developed countries. The per Capita Emissions Cumulative Convergence and the per Capita Emissions Convergence Schemes benefit the development of middle and low developing countries most. However, these two kind of schemes will cause tremendous losses to main economic entities in the world including China. The Pareto Improvement Scheme which is developed from the Steady Economic Growth Scheme balances the fairness and feasibility in carbon abatement process and realize the Pareto improvement of economic utilities in all the participating countries. Thus, the Pareto Improvement Scheme is the most reasonable global cooperating abatement scheme. 

18:30

Connection between development, other 'externalities' and climate

K. Riahi (International Institute for Applied Systems Analysis, Laxenburg, Lower Austria, Austria), J. Jewell (IIASA, Laxenburg, Austria), D. Mccollum (International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria), S. Rao, (IIASA, Laxenburg, Austria), R. Van Dingenen (JRC, Ispra, Italy)

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Connection between development, other 'externalities' and climate

K. Riahi (1) ; J. Jewell (2) ; D. Mccollum (3) ; S. Rao, (2) ; R. Van Dingenen (4)
(1) International Institute for Applied Systems Analysis, Energy Program, Laxenburg, Lower Austria, Austria; (2) IIASA, Laxenburg, Austria; (3) International Institute for Applied Systems Analysis (IIASA), Energy Program, Laxenburg, Austria; (4) JRC, Ispra, Italy

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This talk will present results from the first international modeling comparison project focusing on the co-benefits from climate mitigation for air pollution, health and energy security objectives. The talk will focus on the extend of the co-benefits for different major economies and the climate goal of 2C. 

18:40

Balance between mitigation and adaptation in a general equilibrium perspectives

E. De Cian (Fondazione Eni Enrico Mattei, Venezia, Italy)

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Balance between mitigation and adaptation in a general equilibrium perspectives
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