CIRCLE: PROJECTING ENVIRONMENTAL

FEEDBACKS ON ECONOMIC GROWTH

Rob DellinkEnvironment Directorate, OECD

CCXG Global Forum

18 March 2014

• Two key objectives: – Quantify how changes in environmental quality,

climate change, degradation and scarcity of natural resources affect the economy, and ultimately prospects for long-term growth (costs of inaction)

– Assess the benefits, as well as trade-offs, associated with policy responses to these environmental challenges (benefits of policy action)

• Regional and sectoral quantitative approach where possible, coupled with more general insights where needed

2

CIRCLE Objectives

3

Modelling track

Climate change

Air pollution

Land-water-energy nexus

Water

Biodiversity and ecosystems

Resource scarcity

Scoping track

Project themes and tracks

Climate change impacts and damages

• Coastal land losses and damages to capitalSea level rise

• Changes in morbidity and demand for healthcareHealth

• Changes in productivity of production sectorsEcosystems

• Changes in agricultural productivityCrop yields

• Changes in productivity of tourism servicesTourism flows

• Changes in the demand for energy from cooling and heatingEnergy demand

• Changes in catchment

Fisheries

• Extreme weather events, water stress, catastrophic risks, …Not included

4

-4.0%

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

2010 2020 2030 2040 2050 2060

Global GDP impacts (% change wrt no-damages baseline)

Likely uncertainty rangeequilibrium climate sensitivity (1.5°C - 4.5°C)

5

Global assessment

-4.0%

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

2010 2020 2030 2040 2050 2060

Global GDP impacts (% change wrt no-damages baseline)

Likely uncertainty rangeequilibrium climate sensitivity (1.5°C - 4.5°C)

Wider uncertainty rangeequilibrium climate sensitivity (1°C - 6°C)

Central projection

-4.0%

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

2010 2020 2030 2040 2050 2060

Global GDP impacts (% change wrt no-damages baseline)

Likely uncertainty rangeequilibrium climate sensitivity (1.5°C - 4.5°C)

Wider uncertainty rangeequilibrium climate sensitivity (1°C - 6°C)

Central projection

Note: Preliminary results using ENV-Linkages model; not to be cited or quoted

6

Sectoral results (central projection)

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

OECD America OECD Europe OECD Pacific Rest of Europeand Asia

Latin America Middle East &North Africa

South & South-East Asia

Sub-SaharanAfrica

World

Global GDP impact (% change wrt no-damages baseline, 2060)

AgricultureEnergy intensive industriesOther industries

ServicesGDP

Note: Preliminary results using ENV-Linkages model; not to be cited or quoted

• Post-2060 stylised assessment reveals:– GDP losses remain for at least a century– Substantial increase in risk of much larger damages

• Further work needed to …– … expand the quality of the calibration, esp.

agriculture– … expand the range of impacts (water, extreme

weather, …)– … look at large-scale disruptions / catastrophic

risks: unable to quantify but may potentially be larger than incremental damages

– … do more thorough uncertainty analysis– … integrate with other CIRCLE themes– … assess benefits of policy action (adaptation &

mitigation)

Placing results into context

7

THANK YOU!For more information:

www.oecd.org/environment/indicators-modelling-outlooks/CIRCLE.htm

www.oecd.org/environment/modelling

• Baseline– OECD@100 baseline available

• Climate change– Background report (Prof. Sue Wing) completed– Collaboration with FEEM to model climate

damages– Contribution to OECD@100, NAEC

• Air pollution– Collaboration with IIASA and PBL– Work on emissions in ENV-Linkages, planning

scoping work on health impacts and feedbacks to economy

• Land-water-energy nexus– Collaboration with PBL

9

Current status: modelling track

• Biodiversity and ecosystems– Scoping work started with consultant Anil

Markandya

• Water– Scoping work started on water stress with

consultant Thomas Hertel– Still need to scope water pollution and to

identify delineation with nexus analysis

• Natural resources– Collaboration with LSE established for work on

specific case studies 10

Current status: scoping track

11

Shares of selected impacts

Agriculture

Ecosystems

Energy

FisheriesHealth

Sea level rise

Tourism

World damages 2035

AgricultureEcosystems

Energy

Fisheries

Health

Sea level rise

Tourism World damages 2060

Note: Preliminary results using ENV-Linkages model; not to be cited or quoted

12

Regional results (central projection)

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2010 2020 2030 2040 2050 2060

Regional GDP impacts (% change wrt no-damages baseline)

OECD Pacific

Rest of Europe & Asia OECD EuropeLatin AmericaOECD America

WorldSub- Saharan Africa

Middle East & North Africa

South & South-East Asia

13

Unilateral regional effects (central proj.)

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

OECD America OECD Europe OECD Pacific Rest of Europeand Asia

Latin America Middle East &North Africa

South & South-East Asia

Sub-SaharanAfrica

Regional GDP impacts (% change wrt no-damages baseline)

'Unilateral' impact

Total impact

Note: Preliminary results using ENV-Linkages model; not to be cited or quoted

14

Stylised analysis post-2060 (AD-RICE)

-6%

-5%

-4%

-3%

-2%

-1%

0%2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Global GDP impacts (% change wrt no-damage baseline)

Likely uncertainty range (Business as Usual)

Likely uncertainty range (Committed by 2060)

Central projection (Business as Usual)

Central projection (Committed by 2060)-6%

-5%

-4%

-3%

-2%

-1%

0%2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Global GDP impacts (% change wrt no-damage baseline)

Likely uncertainty range (Business as Usual)

Likely uncertainty range (Committed by 2060)

Central projection (Business as Usual)

Central projection (Committed by 2060)

15

Stylised analysis post-2060 (AD-RICE)

-10%

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Global GDP impacts (% change wrt no-damage baseline)

Likely uncertainty range (Business as Usual)

Wider uncertainty range (Business as Usual)

Central projection (Business as Usual)

Central projection (no adaptation)

Central projection (Weitzman damages)-10%

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Global GDP impacts (% change wrt no-damage baseline)

Likely uncertainty range (Business as Usual)

Wider uncertainty range (Business as Usual)

Central projection (Business as Usual)

Central projection (no adaptation)

Central projection (Weitzman damages)