Documents Dellink, Rob 7 results

"This report focuses on the effects of climate change impacts on economic growth. Simulations with the OECD's dynamic global general equilibrium model ENV-Linkages assess the consequences of a selected number of climate change impacts in the various world regions at the macroeconomic and sectoral level. This is complemented with an assessment of very long-run implications, using the AD-RICE model. The analysis finds that the effect of climate change impacts on annual global GDP is projected to increase over time, leading to a global GDP loss of 0.7% to 2.5% by 2060 for the most likely equilibrium climate sensitivity range. Underlying these annual global GDP losses are much larger sectoral and regional variations. Agricultural impacts dominate in most regions, while damages from sea level rise gradually become more important. Negative economic consequences are especially large in South and South-East Asia whereas other regions will be less affected and, in some cases, benefit thanks to adjustments from international trade. Emissions to 2060 will have important consequences in later decades and centuries. Simulations with the AD-RICE model suggest that if emissions continue to grow after 2060, annual damages of climate change could reach 1.5%-4.8% of GDP by the end of the century. Some impacts and risks from climate change have not been quantified in this study, including extreme weather events, water stress and large-scale disruptions. These will potentially have large economic consequences, and on balance the costs of inaction presented here likely underestimate the full costs of climate change impacts. More research is needed to assess them as well as the various uncertainties and risks involved. However, this should not delay policy action, but rather induce policy frameworks that are able to deal with new information and with the fact that by their nature some uncertainties and risks will never be resolved."

"This paper examines the cost of a range of national, regional and global mitigation policies and the corresponding incentives for countries to participate in ambitious international mitigation actions. The paper illustrates the scope for available instruments to strengthen these incentives and discusses ways to overcome barriers to the development of an international carbon price, based on the quantitative assessment from two global and sectorially-disaggregated CGE models. Key step towards the emergence of a single international carbon price will most likely involve the phasing out of subsidies of fossil fuel consumption and various forms of linking between regional carbon markets, ranging from direct linking of existing emission trading systems to more indirect forms through the use of sectoral crediting mechanisms. The paper discusses regulatory issues raised by the expansion of emission trading and crediting schemes as well as the complementary contribution of non-market based instruments such as the imposition of technical standards and R&D policies. Finally, the paper emphasises the important role of international transfers, not least to overcome the relatively strong economic incentives in some countries to free ride on other regions mitigation actions. While they can take various explicit or implicit forms, transfers made primarily through market mechanisms, for instance via the allocation of binding emission reduction commitments across countries, would be most cost-effective. "

Climate change and outdoor air pollution are two of the most challenging environmental issues that modern society faces. These challenges are strongly linked through their emission sources, the sectors they affect and the policies that can be implemented to reduce emissions. They also interact in the way they affect economic growth in the coming decades, although this aspect has been neglected in the literature. This paper presents the first global analysis of the joint economic consequences of climate change and outdoor air pollution to 2060, in the absence of new policies to address these challenges. A common methodology and a consistent modelling framework is used to specify the main economic interaction effects. While this paper provides a useful framework to analyse the interactions between two environmental issues in the economic system, the results need to be interpreted carefully, because of limited data availability."

"This paper analyses the long-term effects of the COVID-19 pandemic and associated government responses on the environment. It uses large-scale modelling to investigate the impact of sectoral and regional shocks to the economy until 2040. These detailed economic impacts are linked to a range of environmental pressures, including greenhouse gas emissions, emissions of air pollutants, the use of raw materials and land use change. The short-term reductions in environmental pressures are significant: in 2020, energy-related greenhouse gas and air pollutant emissions dropped by around 7%. Environmental pressures related to agriculture observed a smaller drop in 2020. The reduction in the use of non-metallic minerals, including construction materials, reached double digits. From 2021, emissions are projected to increase again, gradually getting closer to the pre-COVID baseline projection levels as growth rates recover fully. But there is a long-term – potentially permanent – downward impact on the levels of environmental pressures of 1‑3%."

"The world's raw materials consumption is expected to nearly double by 2060. This is particularly alarming because materials extraction, processing, use and waste management lead to significant environmental pressures. A circular economy aims to transform the current linear economy into a circular model to reduce the consumption of finite material resources by recovering materials from waste streams for recycling or reuse, using products longer, and exploiting the potential of the sharing and services economy.

This paper underlines the synergies policy makers can create between different resource-efficient and circular economy transition objectives when designing policy packages. It also highlights potential trade-offs that may arise in their implementation. The paper shows that the existing OECD policy analysis provides a toolkit for governments to take more ambitious actions toward a resource-efficient, circular economy. In addition, OECD modelling studies project that the transition can bring significant environmental gains while preserving economic growth and social objectives."

"This paper presents a detailed economic modelling analysis of public finance in the transition towards carbon neutrality. It outlines results from a Net-Zero Emission Ambition scenario, which reflects the ambition to achieve net-zero carbon dioxide emissions globally by mid-century, using a broad and region-specific policy package that combines various policy instruments: carbon pricing, removal of fossil fuel support, regulations in the power sector, and other policies that stimulate investments by firms and households to reduce and decarbonise energy use. The analysis relies on the OECD global computable general equilibrium ENV-Linkages model.

Results show that transitioning towards carbon neutrality is feasible when considering economic and fiscal consequences. The scenario achieves carbon neutrality while maintaining continued economic growth, despite a limited negative impact on global GDP and on public revenues. The fiscal effects reflect a trade-off between instruments that increase public revenues (carbon pricing) or reduce public expenditures (fossil fuel subsidies removal), on the one hand, and more costly instruments (subsidies) and indirect effects (tax base erosion and changes in fiscal and economic structure) on the other hand."