Title page
Contents
Foreword 6
Abstract 7
Executive Summary 7
1. Introduction 12
2. Economic costs of climate change in Europe 13
2.1. A simple framework 13
2.2. Literature review 14
2.2.1. Climate change impact costs on European households 14
2.2.1.1. Expenditure channel 14
2.2.1.2. Asset channel 17
2.2.1.3. Productivity channel 19
2.2.1.4. Gaps 19
2.2.2. Climate change adaptation of European households 20
2.2.2.1. Expenditure channel 20
2.2.2.2. Asset channel 20
2.2.2.3. Gaps 22
2.2.3. Climate change cost of mitigation for European households 23
2.2.3.1. Expenditure and income channel 23
2.2.3.2. Recycling scheme 24
2.2.3.3. Gaps 24
3. A new empirical study on the costs of climate change impacts and adaptation on households 24
3.1. Methodology 24
3.2. Data and projections 26
3.2.1. Climate-related hazards metrics and their projections 26
3.2.2. Socioeconomic data, metrics and projections 30
3.3. The relationship between climate/hazard metrics and the cost of climate change 34
3.3.1. Costs of climate change impacts through the health and food expenditure channel 34
3.3.2. Costs of climate change adaptation through the energy expenditure channel 35
3.3.3. Overall costs of climate change impacts and adaptation through the expenditure channel 36
3.3.4. Costs of climate change impacts through productivity channels 37
3.3.5. Costs of climate change impact through the asset channel 39
3.3.6. Costs of climate change adaptation through the asset channel 40
3.3.7. Overall costs of climate change impacts and adaptation through productivity and asset channels 41
3.4. Projected cost of climate change impacts and adaptation in 2050 42
3.4.1. Climate change costs across EU regions 42
3.4.2. Climate change costs across EU households 46
3.4.3. Climate change implications on inequality and poverty 49
4. Poverty and inequality implications of mitigation measures of climate change impacts 52
5. EU policies to curb distributional implications of climate change 54
5.1. Policies curbing distributional implication of impacts and adaptation 54
5.2. Policies curbing distributional implication of mitigation 56
6. Recommendations for future actions 57
Bibliography 59
Appendix A. Climate data, metrics and projections 64
Appendix B. Future climate and socioeconomic scenarios 65
Appendix C. Distributional and poverty metrics in the Eurostat's HBS 66
Appendix D-Ⅰ. Descriptive statistics 68
Appendix D-Ⅱ. Regression results 72
Appendix D-Ⅲ. The relationship between climate/hazard metrics and the cost of climatechange at tercile level 76
Figure 1. Climate/hazard metrics at the NUTS-1 level in historical period(left column) and projected changes in SSP2-4.5(central column) and SSP5-8.5(right column)... 29
Figure 2. Total equivalized expenditure across Member States and EU27 average-red line-(left) and expenditure shares across Member States(right). 2010 and 2015... 31
Figure 3. Mean equivalised income sources across Member States and EU averages-lines-(left), and mean labour income source shares across Member States(right).... 32
Figure 4. GDP and population at the NUTS-1 level in historical period(left column) and projected % changes in SSP2(central column) and SSP5(right column) with... 34
Figure 5. The cost of climate change through the expenditure channel, average response function in EU 37
Figure 6. The cost of climate change impacts through the productivity channel, average margins, and response functions in EU 39
Figure 7. The cost of climate change impacts and adaptation through the asset channel, average 41
Figure 8. The 2050 cost of climate change through the expenditure channel, %change w.r.t. no climate change scenario 43
Figure 9. The 2050 cost of climate change through the productivity channel, %change w.r.t. no climate change scenario 44
Figure 10. The 2050 cost of climate change through the asset channel, %change w.r.t. no climate change scenario 46
Figure 11. The 2050 cost of climate change across expenditure good and services by tercile, %change w.r.t. no climate change scenario 47
Figure 12. The 2050 cost of climate change across income sources by tercile, %change w.r.t. no climate change scenario 49
Figure 13. % change of Gini index in 2050 under climate change scenarios w.r.t. no climate change scenario measured on labour income(left) and monetary net income(right) 50
Figure 14. % of individuals at-risk-of-poverty in 2050 under no climate change scenario and climate change scenarios measured on labour income(left) and monetary... 51
Figure 15. Energy, gas and electricity poverty prevalence change due to climate change scenarios in 2050 w.r.t. no climate change scenario 52
Figure 16. % change of Gini index in 2030 under the mitigation scenarios w.r.t. reference scenario(left) and individuals atrisk-of-poverty in 2030 across scenarios(right) 54
Figure 17. Gini index according to HBS and EUSILC, average of 2010 and 2015 data 66
Figure 18. At-risk-of-poverty rate according to HBS and EUSILC, average of 2010 and 2015 data(missing imputed rent in CZ, IE, SE, SI, UK) 67
Figure 19. Gini index computed on the net monetary income and on the labour income(left) and at-risk-of-poverty rate measured using net monetary income and job... 67
Boxes
BOX 1. Shared Socio-Economic Pathways(SSPs) 33
Table 1. Changes in global surface temperature with respect to the historical period 1850-1900 and 1995-2014. Source: IPCC AR6(2021), pag.572 65
Table 2. Equivalised expenditure by country and year 68
Table 3. Equivalised expenditure shares by country 69
Table 4. Equivalised expenditure by category and quintile 70
Table 5. Equivalised expenditure share by category and quintile 70
Table 6. Equivalised labor income by category and quintile 71
Table 7. Equivalised labor income by source and quintile 71
Table 8. Equivalised labour income share by source and country 71
Table 9. Regression results for all households and terciles 72