Title page
Contents
ABSTRACT 4
1.0. INTRODUCTION 5
2.0. SECTORAL IMPACTS OF PHYSICAL CLIMATE RISK 8
2.1. Overview 8
2.2. Firm Data 9
2.3. Climate Scenarios 10
2.4. Climate Data 13
2.5. Chronic and Extreme Climate Indicators 14
2.6. Estimation of the Sectoral Productivity Impact of Physical Climate Risks 17
2.7. Physical Climate Risk Impacts on Sectoral TFP 20
2.8. Impact of Floods on Sectoral Capital 27
3.0. MODELING PHYSICAL CLIMATE RISKS IN THE G-CUBED 29
3.1. Overview 29
3.2. Modeling Physical Climate Risks in Economic Models 29
3.3. The G-Cubed Model 32
3.4. Economic Shocks from Physical Climate Risks 36
4.0. ECONOMIC IMPACTS OF PHYSICAL CLIMATE RISKS 37
4.1. Overview 37
4.2. Changes in Real GDP 38
4.3. Changes in Consumption and Investment 42
4.4. Changes in Exports and Imports 43
4.5. Changes in Other Macro-financial Variables 43
4.6. Changes in Sectoral Output 45
5.0. POLICY IMPLICATIONS 47
6.0. CONCLUSIONS 48
REFERENCES 50
ANNEXURE 01: HISTORICAL VARIATION IN CLIMATE INDICATORS 56
ANNEXURE 02: PROJECTED VARIATION IN CLIMATE INDICATORS UNDER SSP 1-2.6 58
ANNEXURE 03: PROJECTED VARIATION IN PRODUCTIVITY UNDER SSP 1-2.6 62
ANNEXURE 04:IMPACTS OF FLOOD RISKS ON THE PHYSICAL CAPITAL STOCK OF FIRMS 64
ANNEXURE 05: MEAN FLOOD DAMAGE UNDER SSP 1-2.6 66
ANNEXURE 06: TFP SHOCKS UNDER SSP 1-2.6 68
ANNEXURE 07: MACROECONOMIC RESULTS UNDER SSP 1-2.6 70
ANNEXURE 08: MACRO-FINANCIAL RESULTS UNDER SSP 1-2.6 72
ANNEXURE 09: SECTORAL RESULTS UNDER SSP 1-2.6 74
SUPPLEMENTARY ANNEXURE 01: DISTRIBUTION OF THE 20,215 FIRMS (THOSE USED FOR THE EMPIRICAL ANALYSIS) ACROSS UNITED NATIONS REGIONS 76
SUPPLEMENTARY ANNEXURE 02: HISTORICAL FINANCIAL PERFORMANCE INDICATORS: GROWTH IN OPERATING REVENUE 82
SUPPLEMENTARY ANNEXURE 03:NARRATIVES OF THE SHARED SOCIOECONOMIC PATHWAYS 89
SUPPLEMENTARY ANNEXURE 04: HISTORICAL AVERAGE VARIATION IN CLIMATE INDICATORS AT FIRM LOCATIONS: TEMPERATURE 90
SUPPLEMENTARY ANNEXURE 05: PROJECTED AVERAGE VARIATION IN CLIMATE INDICATORS AT FIRM LOCATIONS UNDER SSP 1-2.6: TEMPERATURE 98
SUPPLEMENTARY ANNEXURE 06: PROJECTED AVERAGE VARIATION IN CLIMATE INDICATORS AT FIRM LOCATIONS UNDER SSP 2-4.5: TEMPERATURE 106
SUPPLEMENTARY ANNEXURE 07: MAPPING OF NACE SECTORS FOR FLOOD RISKS 114
SUPPLEMENTARY ANNEXURE 08: MAPPING UNITED NATIONS COUNTRIES TO UNITED NATIONS REGIONS AND G-CUBED REGIONS 115
SUPPLEMENTARY ANNEXURE 09: MAPPING GTAP SECTORS TO G-CUBED SECTORS 119
SUPPLEMENTARY ANNEXURE 10: PRODUCTION STRUCTURE OF THE G-CUBED MODEL 120
Table 1. Distribution of Firms across Sectors and Countries 10
Table 2. Temperature Outcomes under SSPs 12
Table 3. Indicators of Chronic and Extreme Climate Conditions 16
Table 4. Regions in the G-Cubed Model 33
Table 5. Sectors in the G-Cubed Model 34
Table 6. Average Annual Percentage Deviation in Real GDP 39
Table 7. Summary of Current Estimates of the Global Economic Consequences of Physical Climate Risks 41
Figure 1. Distribution of the Sample 1 Firms across Broad Sectors and United Nations Regions 11
Figure 2. Distribution of the Sample 2 Firms across Broad Sectors and United Nations Regions 11
Figure 3. Percentage Change in Productivity in Sectors Attributable to Physical Climate Risks 20
Figure 4. Percentage Damage Rates from Floods by Continent and Sector 29
Figure A. Flood depth projections under SSP 1-2.6 64
Figure B. Flood depth projections under SSP 1-2.6 64