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Climate Change Impact Assessment

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Bruce A. McCarl Distinguished Professor of Agricultural Economics Texas A&M University mccarl_at_tamu.edu http://agecon2.tamu.edu/people/faculty/mccarl-bruce/ – PowerPoint PPT presentation

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Title: Climate Change Impact Assessment


1
Economic Vulnerability under Climate Change
With an Agricultural Emphasis
Bruce A. McCarl Distinguished Professor of
Agricultural Economics Texas AM University
mccarl_at_tamu.edu http//agecon2.tamu.edu/people/fa
culty/mccarl-bruce/
Climate Change Adaptation
Energy
Climate Change Effects
Climate Change Mitigation
Ramblings from an Ongoing and Never Ending Effort
Presented at the Climate Change Class, March 2003
2
Economic Issues in Climate Change
  • Assessment of Impact
  • Externality and Market Failure
  • Mitigation Policy
  • Cost Benefit Analysis

3
Economic Issues Assessment of Impact
  • Measuring Economic Value
  • Income Distribution
  • Inter-generational Equity

4
Basic Setting
D
S
P r i c e
Quantity
5
Basic Setting
Sc
D
S
P r i c e
a
CS0 abdf PS0 ceg TSW0 abcdeg CSc
a PSc bc TSWc abc ?CSc -b-d-f PSc
b-e-g TSWc -d-e-f-g
b
d
f
g
e
c
Quantity
6
Basic Setting between regions
D
Sregion1
Sregion2
P r i c e
region1
region2
demand
Quantity
7
Basic Setting between regions
D
SCCregion1
Sregion1
Sregion2
P r i c e
SCCregion2
region1
region2
demand
Quantity
8
Basic Setting between regions No Climate change
Sregion2
Sregion1
D
P r i c e
ED
region2
region1
Quantity
9
Basic Setting between regions No Climate change
Sregion2
Sregion1
D
P r i c e
ED
P
Qs1
Qs2
Qd
region2
region1
Quantity
10
Basic Setting between regions With Climate change
SCCregion1
Sregion2
Sregion1
SCCregion2
D
P r i c e
ED
Region 1 loses mkt share and produces
less Region 2 gains mkt share and produces
more Consumers gain All producers gain (I
think)
P
PCC
QCCs1
Qs1
Qd
Qs2
QCCd
QCCs1
QCCs2
region2
region1
Quantity
11
Economic Issues Cost/Benefit Analysis
  • Extent of Damages
  • Uncertainties in Impact Assessment
  • Assumptions on scope of impact
  • Economic approach to estimating welfare

12
Would Climate Change Hurt/Benefit ?
13
Assessment Methodology - Summary Steps
  • Identify sectors and physical effects
  • Determine spatial and time scales
  • Develop scenario regarding non-climatic factors
  • Obtain GCM projections
  • Chose analytical framework (econ theory
    foundation and models to be used) and adapt or
    estimate models
  • Assess physical impact of GCM projections
  • Make assumptions about unmodeled phenomena
  • Incorporate physical impact into economic models
  • Incorporate data on possible adaptations to
    climate change
  • Do analysis including sensitivity analysis

14
Scope of Assessment
  • Identify sectors and physical effects
  • The question relates to the choice of sector of
    the economy for impact assessment agriculture,
    water, etc. Can this really be treated
    independently?
  • Economic and geographic scale
  • Firm level or sector level assessment, regional
    or national or international
  • Time frame
  • Climate change is a long-term phenomenon that
    requires analysts to decide the time frame of
    analysis, which would determine impact assessment
    results
  • Dynamic Vs Static Analysis

15
Scenario Development
  • Non-climatic Scenarios
  • Climate change Scenarios
  • Time frame and uncertainty

16
Non Climatic - Socio-Economic Scenarios
  • Population
  • Demand (Product/Input Markets)
  • Economic growth
  • Economic structure

17
Non climate scenarios
  • Include at least two scenarios "baseline" or
    "reference" scenario and "mitigation scenario"
  • Assumptions e.g. economic growth, technology,
    etc.

Figure TS.1 Qualitative directions of SRES
scenarios for different indicators
Source CC 2001 mitigation p. 24 at
http//www.grida.no/climate/ipcc_tar/wg3/015.htm2
4
18
Climate Change Scenarios
  • Synthetic scenarios
  • Assumed changes in temperature and precipitations
  • Kaiser et al. Mendelsohn, Adams et al.
  • Global Circulation Models (GCMs)
  • Model based predictions of temperature and
    precipitations for certain geo-graphic resolution
  • US national assessment, Rosenzweig and Hillel

19
Obtain GCMs Projections
  • Data Distribution Center of IPCC maintains GCM
    projections (http//ipcc-ddc.cru.uea.ac.uk/)
  • Decide GCM scenarios whose projections you would
    use (Ref. Guide to GCM Scenarios - DDC)
  • Visualization pages /Downloadable files
  • Chose GCMs that have better calibrated base
    climate for the assessment country/region
  • Compuate percentage changes in temp. and precipt
    for a grid and apply to weather stations
  • Choose more than one GCMs for sensitivity
    analysis

20
GCM Projections climate change - What is projected
Climate models predict increasing emissions
will cause a temp increase
Source IPCC AR4t
21
GCM Projections Precipitation Projections
John Nielson Gammon, TAMU
22
GCM - Geographic Scale
  • Circa 2001
  • HADCM 3.75 x 2. 5 deg. (96X72 grids)
  • CGCM 3.75 x 3.75 deg. (9648 grids)
  • GDFL 7.5 x 4.5 deg. (4840 grids)
  • Texas was covered by 4 grids (Rosenzweig and
    Hillel)

23
Time scale What is projected
Hotter
24
Effects to Consider
Temp Rainfall CO2 SeaLevel ExtremeEvents Plant
s Crop and forage growth X X
X X Crop /forage water
need X X X
X Soils Soil moisture supply X
X X Irrigation demand
X X X X
Soil fertility X X X
Animals Performance X
X X Pasture/Range
Carry cap X X X
X Irrigation Water Supply Evaporation loss
X X X
Run-off/general supply X X
X Non-AG competition
X X X Other Water borne
transport X X
X Port facilities X
X X Pest and diseases
X X Insurance X
X X
25
Choose Analytical Framework
  • Spatial Analogue/current data
  • Structural Approach

26
Analytical Framework - Spatial Analogue
  • Ricardian Land Rent Approach
  • Profit Function Approach
  • In both cases
  • EconValue f(controls,climate)

27
Analytical Framework - Structural App.
  • Modeling biophysical and physical sensitivity to
    climate change
  • Modeling demand/supply sensitivity to unmodeled
    climate sensitivity
  • Integrated Assessment Modeling

28
Appraisal Approaches
  • Physical assessments that only consider changes
    in physical character (e.g. changes in yield)
  • Changes in cost as estimated in Chen and McCarl
    (Land rent, and Profit)
  • Welfare estimates (market and non-market)

29
Physical Impacts to Economic Impacts
  • Estimate physical impacts using structural or
    spatial analogue
  • Make assumptions about unmodeled phenomenon
  • Incorporate physical impacts into
    economic/empirical models

30
Analytical Framework
Climate Scenarios GCMs Crop Simulation
regional crop yields (dry and
irrigated) regional irrigated crop water
use Hydrologic simulation irrigation water
supply, Expert opinion livestock
performance, Range and hay simulation and
calculation -- livestock pasture
usage, animal unit month grazing supply Other
studies international supply and
demand Regression pesticide usage Economics
ASM sector model
31
Adaptations to Climate Change
  • Sensitivity vs Vulnerability
  • Nature of Adaptations
  • Producers
  • Markets/Policy
  • Technology
  • Cost of Adaptations

32
Analysis and Senstivity Analysis
  • Analysis
  • Assumptions and limitations
  • Policy relevance/Know your audience
  • Sensitivity Analysis
  • Identify factors of sensitivity
  • Analyze results within realistic bounds

33
Selected Assessments
Fischer et al. (1996) Mendelsohn, Morrison, and
Andronova (2000) U.S. National Assessment (Adams
et al.)
34
Assessment - Fischer et al. (1996)
  • Scope Global (112 sites from 18 countries)
  • Sector Food production
  • Timeframe 2030, 2060
  • Socio-Econ Scenario Pop. and Tech (Ag.)
  • GCMs GISS, GFDL, and HADCM models
  • Assess. Meth. Structural approach (Ag.)
  • Adaptations Two levels of adaptation
  • No major global loss in global production of food
  • Marked regional differences in impacts

35
Assessment - Mendelsohn, Morrison, and Andronova
(2000)
  • Global (184 countries)
  • Agriculture, Forestry, and Coastal Areas
  • Timeframe 2060
  • Socio-Econ Scenario Pop. and GDP growth
  • GCMs Assumed 2 deg. temp. increase
  • Assess. Meth. Spatial Analogue
  • Adaptations Implicitly imbeded in model results
  • 0.278 bil. loss, with 215 bil. from ag.
  • OECD gains 69 bil., while rest of world loses
    348 bil.

36
U.S. National Assessment
  • Scope National
  • Sectors Agri., Forest, Water, Coastal Area,
    Health
  • Timeframe 2060
  • Socio-Econ Scenario Only climate changed (Ag.)
  • GCMs HADCM and CGCM
  • Assess. Meth. Structural approach
  • Adaptations Planting schedule, tech., market
  • 0.5 bil. loss, with 12.5 bil. gain
  • Gains from trade

37
Emerging or Untreated Issues in Assessment
  • Probability and severity of extreme events
  • Valuation of non-market impacts (loss of life and
    bio-diversity)
  • Distributional issues (weights)
  • Aggregation and extrapolation from limited
    geographic studies hides heterogeneity of
    responses to climate change
  • How can we alter policy/research innovation
    investment to achieve a more desirable mix of CC
    effects
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