Development of a modelling framework in support of an assessment of the economic and social impacts of climate change in the Caribbean: the ECLAC – CIAM Model

The Caribbean region remains highly vulnerable to the impacts of climate change. In order to assess the social and economic consequences of climate change for the region, the Economic Commission for Latin America and the Caribbean( ECLAC) has developed a model for this purpose. The model is referred to as the Climate Impact Assessment Model (ECLAC-CIAM) and is a tool that can simultaneously assess multiple sectoral climate impacts specific to the Caribbean as a whole and for individual countries. To achieve this goal, an Integrated Assessment Model (IAM) with a Computable General Equilibrium Core was developed comprising of three modules to be executed sequentially. The first of these modules defines the type and magnitude of economic shocks on the basis of a climate change scenario, the second module is a global Computable General Equilibrium model with a special regional and industrial classification and the third module processes the output of the CGE model to get more disaggregated results. The model has the potential to produce several economic estimates but the current default results include percentage change in real national income for individual Caribbean states which provides a simple measure of welfare impacts. With some modifications, the model can also be used to consider the effects of single sectoral shocks such as (Land, Labour, Capital and Tourism) on the percentage change in real national income. Ultimately, the model is envisioned as an evolving tool for assessing the impact of climate change in the Caribbean and as a guide to policy responses with respect to adaptation strategies.

An assessment of the economic and social impacts of climate change on the Coastal and Marine Sector in the Caribbean

Climate change poses special challenges for Caribbean decision makers related to the uncertainties inherent in future climate projections and the complex linkages between climate change, physical and biological systems, and socioeconomic sectors. At present, however, the Caribbean subregion lacks the adaptive capacity needed to address these challenges. The present report assesses the economic and social impacts of climate change on the coastal and marine sector in the Caribbean until 2050. It aims both to provide Caribbean decision makers with cutting edge information on the vulnerability to climate change of the subregion, and to facilitate the development of adaptation strategies informed by both local experience and expert knowledge.

An assessment of the economic and social impacts of climate change on the health sector in the Caribbean

Climate change affects the fundamental bases of good human health, which are clean air, safe drinking water, sufficient food, and secure shelter. Climate change is known to impact health through three climate dimensions: extreme heat, natural disasters, and infections and diseases. The temporal and spatial climatic changes that will affect the biology and ecology of vectors and intermediate hosts are likely to increase the risks of disease transmission. The greatest effect of climate change on disease transmission is likely to be observed at the extremes of the range of temperatures at which transmission typically occurs. Caribbean countries are marked by unique geographical and geological features. When combined with their physical, infrastructural development, these features make them relatively more prone to negative impacts from changes in climatic conditions. The increased variability of climate associated with slow-moving tropical depressions has implications for water quality through flooding as well as hurricanes. Caribbean countries often have problems with water and sanitation. These problems are exacerbated whenever there is excess rainfall, or no rainfall. The current report aims to prepare the Caribbean to respond better to the anticipated impact of climate change on the health sector, while fostering a subregional Caribbean approach to reducing carbon emissions by 2050. It provides a major advance on the analytical and contextual issues surrounding the impact of climate change on health in the Caribbean by focusing on the vector-borne and waterborne diseases that are anticipated to be impacted directly by climate change. The ultimate goal is to quantify both the direct and indirect costs associated with each disease, and to present adaptation strategies that can address these health concerns effectively to benefit the populations of the Caribbean.

An assessment of the economic and social impacts of climate change on the water sector in the Caribbean

The Caribbean is not homogenous with regard to water resources. The Caribbean climate can be characterized as tropical rainy, with two well-defined seasons, one, rainy, and another, less rainy: these characteristics have specificities according to the geographical location of each country. The rainy, tropical character of the Caribbean climate may suggest that there are enough water resources to satisfy life requirements. Notwithstanding, the availability and distribution of water depends on geological and geographical factors that—given the insular character and characteristics of each country—make water resources both vulnerable and limited.

The impact of climate change on the tourism sector in the Caribbean

The main aim of this study is to estimate the economic impact of climate change on nine countries in the Caribbean basin: Aruba, Barbados, Dominican Republic, Guyana, Jamaica, Montserrat, Netherlands Antilles, Saint Lucia and Trinidad and Tobago. A typical tourism demand function, with tourist arrivals as the dependent variable, is used in the analysis. To establish the baseline, the period under analysis is 1989-2007 and the independent variables are destination country GDP per capita and consumer price index, source country GDP, oil prices to proxy transportation costs between source and destination countries. At this preliminary stage the climate variables are used separately to augment the tourism demand function to establish a relationship, if any, among the variables. Various econometric models (single OLS models for each country, pooled regression, GMM estimation and random effects panel models) were considered in an attempt to find the best way to model the data. The best fit for the data (1989-2007) is the random effects panel data model augmented by both climate variables, i.e. temperature and precipitation. Projections of all variables in the model for the 2008-2100 period were done using forecasting techniques. Projections for the climate variables were undertaken by INSMET. The cost of climate change to the tourism sector was estimated under three scenarios: A2, B2 and BAU (the mid-point of the A2 and B2 scenarios). The estimated costs to tourism for the Caribbean subregion under the three scenarios are all very high and ranges from US$43.9 billion under the B2 scenario to US$46.3 billion under the BAU scenario.

The impact of climate change on the macroeconomy in the Caribbean

In this study, an attempt is made to assess the economic impact of climate change on nine countries in the Caribbean basin: Aruba, Barbados, Dominican Republic, Guyana, Jamaica, Montserrat, Netherlands Antilles, Saint Lucia and Trinidad and Tobago. A methodological approach proposed by Dell et al. (2008) is used in preference to the traditional Integrated Assessment Models. The evolution of climate variables and of the macroeconomy of each of the nine countries over the period 1970 to 2006 is analyzed and preliminary evidence of a relationship between the macroeconomy and climate change is examined. The preliminary investigation uses correlation, Granger causality and simple regression methods. The preliminary evidence suggests that there is some relationship but that the direction of causation between the macroeconomy and the climate variables is indeterminate. The main analysis involves the use of a panel data (random effects) model which fits the historical data (1971-2007) very well. Projections of economic growth from 2008 to 2099 are done on the basis of four climate scenarios: the International Panel on Climate Change A2, B2, a hybrid A2B2 (the mid-point of A2 and B2), and a ‘baseline’ or ‘Business as Usual’ scenario, which assumes that the growth rate in the period 2008-2099 is the same as the average growth rate over the period 1971-2007. The best average growth rate is under the B2 scenario, followed by the hybrid A2B2 and A2 scenarios, in that order. Although negative growth rates eventually dominate, they are largely positive for a long time. The projections all display long-run secular decline in growth rates notwithstanding short-run upward trends, including some very sharp ones, moving eventually from declining positive rates to negative ones. The costs associated with the various scenarios are all quite high, rising to as high as a present value (2007 base year) of US$14 billion in 2099 (constant 1990 prices) for the B2 scenario and US$21 billion for the BAU scenario. These costs were calculated on the basis of very conservative estimates of the cost of environmental degradation. Mitigation and adaptation costs are likely to be quite high though a small fraction of projected total investment costs.

An assessment of global economic models for climate change

The project comprises three phases of which Phase I would be implemented over the period September to December 2008. The major objectives of Phase I are, firstly, to establish the scope and feasibility of carrying out a study on the costs/benefits of taking action on climate change adaptation and cost effectiveness of mitigation in the Caribbean compared to a “business as usual” scenario, and secondly, to support initial actions to alert policymakers and key influencing constituencies to the urgency of this challenge.

Review of the economics of climate change (RECC) in the Caribbean project: Phase I climate change profiles in select Caribbean countries

These reports are the result of consultations which were conducted in 2008 in Aruba, Barbados, Netherlands Antilles, Dominican Republic, Guyana, Jamaica, Montserrat, Saint Lucia and Trinidad and Tobago. The objective was to obtain relevant information that would inform a Stern-type report where the economics of climate change would be examined for the Caribbean subregion. These reports will be complimented by future assessments of the costs of the “business as usual”, adaptation and mitigation responses to the potential impacts of climate change. It is anticipated that the information contained in each country report would provide a detailed account of the environmental profile and would, therefore, provide an easy point of reference for policymakers in adapting existing policy or in formulating new ones. ECLAC continues to be available to the CDCC countries to provide technical support in the area of sustainable development.

The impact of climate change on the water sector in the Caribbean

This study econometrically analyses the projected impact of climate change on the water sector of nine Caribbean countries to 2100: Aruba, Barbados, Dominican Republic, Guyana, Montserrat, Jamaica, Netherlands Antilles, Saint Lucia, and Trinidad and Tobago. Overall, all countries, with the exception of Trinidad and Tobago, are expected to suffer aggregate losses as result of climate change in the early periods ca. 2020 under one or more scenarios. Over time, some countries experience declining negative impacts, as in the case of Guyana under the B2 scenario. Some countries, such as the Dominican Republic, is projected to suffer increasing losses under the B2 scenario and, for others, the impacts do not follow a defined trend. The A2 scenario offers the best outcome for all countries, except Jamaica (where BAU is most desirable), Montserrat (which performs most poorly under the A2 scenario), and the Netherlands Antilles, which does best under the B2 case. Overall, relative to 2006, the total demand for water in the Caribbean is expected to fall by 2030 by 11.3% to approximately 12,967 million cubic meters. This is due to the expected fall in agricultural water demand by approximately 36% in that period. However, by 2050, total water demand for the Caribbean will again exceed the 2006 level by approximately 4% to 14,896.33 106 m3. By 2100, water demand will increase almost fivefold to approximately 69,233.69 106 m3. Climate change is expected to affect all countries in the Caribbean. In some cases, there will be positive impacts that may continue to increase over time and, in other cases, the impact will be negative and worsen over time. Overall, the agricultural sector is expected to suffer the worst losses over any scenario, whilst growth in the industrial sectors is expected to be significant and contribute the most to increasing water demand over time.

Policy Brief: an assessment of the economic and social impacts of climate change on the coastal and marine sector in the Caribbean

Caribbean policymakers are faced with special challenges from climate change and these are related to the uncertainties inherent in future climate projections and the complex linkages among climate change, physical and biological systems and socioeconomic sectors. The impacts of climate change threaten development in the Caribbean and may well erode previous gains in development as evidenced by the increased incidence of climate migrants internationally. This brief which is based on a recent study conducted by the Economic Commission for Latin America and the Caribbean (LC/CAR/L.395)1 provides a synthesis of the assessment of the economic and social impacts of climate change on the coastal and marine sector in the Caribbean which were undertaken. It provides Caribbean policymakers with cutting-edge information on the region’s vulnerability and encourages the development of adaptation strategies informed by both local experience and expert knowledge. It proceeds from an acknowledgement that the unique combination of natural resources, ecosystems, economic activities, and human population settlements of the Caribbean will not be immune to the impacts of climate change, and local communities, countries and the subregion as a whole need to plan for, and adapt to, these effects. Climate and extreme weather hazards related to the coastal and marine sector encompass the distinct but related factors of sea level rise, increasing coastal water temperatures, tropical storms and hurricanes. Potential vulnerabilities for coastal zones include increased shoreline erosion leading to alteration of the coastline, loss of coastal wetlands, and changes in the abundance and diversity of fish and other marine populations. The study examines four key themes in the analysis: climate, vulnerability, economic and social costs associated with climate change impacts, and adaptive measures.

The economics of climate change in Latin America and the Caribbean: Paradoxes and challenges. Overview for 2014

Foreword by Alicia Bárcena.