Modelling the economic consequences of climate change

This chapter first presents a brief discussion of the main categories of climate change impacts. It then introduces the methodology used to identify how climate impacts affect economic growth. It highlights how the costs of inaction until 2060 can be assessed using a production function approach to link climate change impacts to specific drivers of growth in the dynamic general equilibrium model ENV-Linkages and how and why this is complemented by a more stylised integrated assessment modelling of long-term impacts using the AD-DICE model. The chapter ends with a description of how the production function approach is used to model the various impacts in ENV-Linkages.