Characterizing regional economic impacts and responses to climate change

While much progress has been made in recent years in modeling the impacts o f greenhouse gases on global climate and impacts of global climate change o n regional climates, much less progress has been made in modeling economic impacts and responses to climate change, particularly at a regional level. This lack of progress is due, in large part, to the fact that there is no g enerally accepted framework for characterizing the regional economic impact s of, and responses to, climate change. The objective of this paper is to m ake a start at such a framework. We divide economic impacts at a regional l evel into four broad categories: direct impacts on production of market goo ds and services; direct impacts on production of nonmarket goods and servic es; indirect impacts on other economic sectors within the region; and indir ect impacts operating through other regions and countries. We go on to cons ider two modeling frameworks for responses to climate change: static, in wh ich regional capital stocks, technologies, and public and private instituti ons are exogenous; and dynamic, in which these variables are endogenous. Dy namic responses in capital stocks, technologies, and institutions are likel y to be the most important adaptations to climate change and its effects on ecosystems, but also the least well understood at the present time. (C) 20 00 Elsevier Science B.V. All rights reserved.