The integration of Peseta Sectoral Economic Impacts into GEM-E3 Europe: Methodology and Results

Abstract

The PESETA project has estimated the physical effects of climate change in Europe for the following impact categories with a market valuation: agriculture, river floods, coastal systems and tourism. Four alternative scenarios of future climate change have been considered. The computable general equilibrium (CGE) GEM-E3 model for Europe has been used to integrate the PESETA damages under a consistent economic framework. The approach followed has been to assess the effects of future climate (as of 2080s) on today’s economy. This article details the way each sectoral impact has been integrated into the CGE model. The EU welfare loss is estimated to be in a range of 0.2% to 1%, depending on the climate future and the projected sea level rise. Results show that the Southern Europe region appears as the most vulnerable area to climate change. Impacts in coastal systems, agriculture and river floods determine the overall and regional pattern of impacts within Europe. The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.