Climate change has arrived in Germany – noticeably and evidently. This results inter alia in economic losses due to crop failures, repair costs of infrastructure damages and increasing health expenditures. Yet, climate change damages and adaptation costs are so far significantly less explored than avoidance of greenhouse gases or the economic impacts of climate protection measures.
Against this background, the project “Costs of Climate Change Impacts in Germany” conducts an exploratory, systematic and comprehensive analysis and estimation of follow-up costs for the German economy. Beside the costs of climate damages due to extreme weather, events as well as the gradual progress of climate change (i.e. damage costs), this includes the costs of adaptive measures (i.e. adaptation costs). The damage and adaptation costs are estimated using the macroeconometric model PANTA RHEI. A detailed mapping of effects at the sectoral level is combined with macroeconomic estimates.
The overall objective is to make the dimensions of past and future costs of climate change visible and to discuss the findings with societal actors. Based on reliable data and information, comprehensible conclusions can be drawn about the distribution of risks and costs along various spatial, sectoral and social dimensions, and the relevance of individual climate impact chains can be highlighted.
Due to its geographical location in the Mediterranean as well as its geophysical characteristics as a small islands region, Malta is vulnerable to the impacts of climate change. In addition to direct physical impacts of climate change (such as sea level rise, extreme weather events, persistent droughts and water scarcity), the direct and indirect economic consequences must also be considered. This calls for a systemic analysis of individual sectoral development dynamics and economy-wide interaction- and feedback-effects resuling from complex socioeconomic interdependencies.
In this service contract for the Maltese Ministry for the Environment, Climate Change and Planning; we are conducting a first such assessment for the Maltese economy. Based on an analysis of the current situation, a deeper understanding of future potential macroeconomic climate change impacts is obtained from scenario modelling analyses. To provide a strong evidence base for adaptation policymaking and adaptation action, knowledge co-creation principles will be realised through rigorous stakeholder engagement on the evaluation stage of this climate vulnerability risk assessment.
Low carbon leakage describes the risk that low-CO2 industries will move to other countries if a country loses its pioneering position in a technology relevant to the energy transition. To analyse the market launch of these technologies, international value chains are modelled to identify market and diffusion barriers and to estimate economic effects. The modelling is accompanied by complementary analyses in which the social dimension of technology change is evaluated. In particular, stakeholder behaviour in the context of international competition and trade relations and the social preconditions for the introduction of new technologies are to be analysed.
The interaction between diffusion of new technologies on a domestic market, the associated showcase function and improvement of the technology's creditworthiness, and finally the positioning of this technology on global markets is often summarised under the term lead market function. Lead markets and corresponding value chains can play a decisive role in overcoming market and diffusion barriers that technologies relevant to the energy transition face. Thereby, the influence of the energy transition on the German and international value chains for these technologies depends not only on the speed of the German energy transition, but also on the speed of the transformations of the trading partners and the potential competitors for the production of technology goods.
The accompanying scientific research project "BEniVer" comprehensively analyses the development of alternative fuels. The aim is to network the 15 technical research projects of the funding initiative with more than 100 participating research groups and industrial partners, to exploit synergy potentials and to make the project results comparable. The project focuses on interdisciplinary analyses of technical, environmental, economic, and social impacts.
The accompanying research is conducted by six research institutions under the direction of the German Aerospace Center on behalf of the Federal Ministry for Economic Affairs and Energy. In particular, GWS will work on the industrial and macroeconomic evaluation of various options.
Uganda and Rwanda have committed to take climate action by ratifying the Paris Agreement, thereby contributing to the goal to limit global average temperature increase well below 2°C.
The macroeconomic implications of CO2 mitigation strategies in these countries have been scarcely explored. The project aims to close this gap and to identify sustainable transformation pathways towards a low-carbon economy.
For this purpose, two country-specific models will be (further) developed jointly with local partners, which map the interrelationships between economy and environment.
The environmental-economic effects of various climate protection scenarios will then be calculated using these models, thus supporting evidence-based policy advice.
In the project "Unpacking climate Impact Chains - a new generation of climate change risk assessments" (UNCHAIN), GWS explores methodological options to advance state of the art climate change adaptation assessments.
In the past, such studies were often carried out as individual sector analyses. Since cross-sectoral impacts and interrelations cannot be systematically assessed in individual sector analyses, corresponding studies are not able to adequately reflect the macroeconomic impacts of the analysed climate phenomena and adaptation measures. Integrated economic modelling approaches are generally in a position to map corresponding effects appropriately. However, so far, they have been applied much less frequently to assess climate adaptation measures.
Based on a literature review of current integrated climate adaptation studies, GWS develops theoretical proposals for the further development of corresponding simulation approaches. Specific implementation possibilities are then examined in selected case studies by means of practical applications of the GWS simulation models PANTA RHEI and GINFORS.
The overall research approach of the project puts heavy emphasis to the concept of co-production of knowledge: Impact chains (ICs) will be developed in order to structure and evaluate the impact factors analysed in individual case studies. ICs are based on a conceptual model consisting of risk components according to the IPCC AR5 concept (hazard, exposure, vulnerability) and underlying factors. The systematic visualisation of the interaction of these risk components as ICs facilitates a structured discussion of main causalities considered within the respective case studies (within the project team as well as with other stakeholders).
UNCHAIN is part of AXIS, an ERA-NET initiated by the JPI Climate and funded by FORMAS (SE), DLR/BMBF (D), AEI (ES) and ANR (FR) and co-financed by the European Union (funding code 776608). The project is managed by the West Norwegian Research Institute (WNRI, Sogndal) & Ramboll France (TEC, Aix en Provence) in collaboration with eight European partners.
Economic effects of adapting critical infrastructure
Improving climate change impact assessments of open economies by beyond state-of-the-art economic modelling approaches
The development of the bioeconomy is closely linked to national and international sustainability goals. As a major importer of agricultural and forestry products, the EU must also take into account the global impact of its own actions in policy-making. Conflicts of interest are foreseeable if expected developments in different areas are superimposed. Data sets and models that can capture these conflicting objectives still have various weaknesses. BEST uses two global macro models based on different data sets and theoretical backgrounds. They are supplemented by a detailed partial model that records production, trade and demand of individual product groups of the bioeconomy. Global land-use change and the effectiveness of land-use governance are also considered.
On this basis, the following questions are examined in detail:
1. What potential development paths are there for the bioeconomy in the EU in the medium term (2030) with regard to the regional and global achievement of SDGs and expectations in different areas of use and
in the long term (2050/60) against the background of Shared Socioeconomic Pathways (SSPs) and climate objectives?
2. What contributions and what conflicts of objectives for the achievement of the socio-economic and environmental SDGs (2, 6–9 and 12–15) in Europe and worldwide result from these development paths?
3. What are the impacts of individual isolated national policies (including the EU) on the promotion and regulation of bioeconomy versus coordinated global mechanisms? What are the opportunities and
limitations to steer the development of a sustainable bioeconomy that ensures the highest possible degree of target achievement? The project is divided into 5 work packages. Two workshops are planned for the
exchange with national and international experts.
The progress of the energy transition is accompanied by a comprehensive monitoring process. The annual monitoring reports focus on the ex-post analysis of the latest developments. The monitoring of energy transition aims to build as much as possible on statistical data and surveys conducted by official institutions. However, an independent reporting system has developed since 2004, particularly on the topics of investment, growth and employment through renewable energies, that has recently been extended to all aspects of the energy system transformation.
The energy transition entails further economic changes which are usually not represented in the official statistics as they require a cross-sectional view of existing classifications and statistics. One example is imports of fossil fuels, which are declining significantly due to the expansion of renewable energies and increasing energy efficiency. Against this background, the project serves to update the relevant economic indicators of energy transition annually. There is also a need for further research into some indicators.
Climate change has a substantial impact on economic growth and a country’s development. This increases the need for reliable and viable approaches to assessing the impact of climate risks and potential adaptation scenarios.
The project consortium will support the pilot countries (Georgia, Kazakhstan and Vietnam) in (i) expanding their model-building capacities with regard to the integration of climate change into economic models, (ii) integrating the results into the political (climate change adaptation) process and (iii) strengthening international cooperation between governments, international organisations and in development cooperation.
Further information on the project, in particular on the three macroeconomic models, is summarized here.
The aim of the project is to estimate how the implementation of the measures required to achieve a climate-neutral economy by 2050 will affect employment. The employment effects are calculated up to 2030. The packages of measures are specifications from Prognos et al. (2020). The employment effects are calculated in the QINFORGE model, which is currently in its 6th wave (Maier et al. 2020).