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Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan (Inglés)

As the effects of climate change become increasingly evident, the design and implementation of climate-aware policies have assumed a more central role in the macroeconomic policy debate. With this has come an increasing recognition of the importance of introducing climate into the economic policy making tools used by central economic policy making agencies (such as ministries of finance and ministries of planning). This paper integrates climate outcomes into a macro-structural model for Pakistan, the kind of model that is suitable for use on a regular basis by ministry staff. The model includes the standard set of variables and economic logic that are necessary for the kinds of forecasting, economic policy, and budgetary planning analysis typically conducted by central ministries. In addition to standard outputs (unemployment, inflation, gross domestic product growth, and fiscal and current accounts), the model generates climate outcomes (tons of carbon emitted and economic and health damages due to higher temperatures and pollution). These outcomes are generated when specific climate policies such as mitigation are analyzed, but also when other policies are analyzed that might have unanticipated climate impacts. The paper describes the changes made to the World Bank’s standard macro structural model, MFMod, in integrated climate outcomes, climate policies, and the economic impacts of climate on Pakistan’s economy. Notably, carbon-tax scenarios show that a $20 carbon tax can reduce emissions in Pakistan by 36 percent by 2050. Gross domestic product impacts could also be positive, if the revenues from the carbon tax were used to reduce reliance on heavily distorting taxes. The model also quantifies associated co-benefits from reduced local air pollution and better health and productivity outcomes. In the absence of action to restrain climate change, the model suggests that increased temperatures and rain variability could reduce output by as much as 10 percent compared with a scenario where global temperature rises were minimized.

Información

  • Autor

    Burns,Andrew, Jooste,Charl, Schwerhoff,Gregor

  • Fecha del documento

    2021/09/23

  • Tipo de documento

    Documento de trabajo sobre investigaciones relativas a políticas

  • Número del informe

    WPS9780

  • Volumen

    1

  • Total Volume(s)

    1

  • País

    Pakistán,

  • Región

    Asia meridional,

  • Fecha de divulgación

    2021/09/23

  • Disclosure Status

    Disclosed

  • Nom. del doc.

    Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan

  • Palabras clave

    Energy; impact of climate change on agriculture; trade and investment; relationship between income tax rate; economic costs of climate change; interest rate on government debt; purchase of goods and services; carbon tax; marginal product of capital; vulnerability to climate change; constant elasticity of substitution; disability adjusted life years; benefit of climate change; natural rate of unemployment; access to financial service; marginal product of labor; cost of climate change; price elasticity of demand; integrated assessment models; effect of climate change; effect of tax policy; interest on government debt; climate co-benefits; tax on corporate income; average productivity of capital; business as usual scenario; economics of climate change; disaster risk reduction strategies; Agricultural Research and Extension; threat of climate change; water use in agriculture; long-run growth; input-output table; Chronic Obstructive Pulmonary Disease; share of health expenditure; generation capacity expansion; real effective exchange rate; law of one price; effect of heat stress; market value of asset; elasticity of labor demand; transferring fund; economic impacts of climate; public sector wage bill; total amount of emissions; access to social security; dynamic computable general equilibrium; climate-related events; cost of capital; energy source; consumption; first order condition; Energy Sector; health care expenditure; local air pollution; speed of adjustment; net indirect tax; local air pollutant; demand for energy; labor productivity; adaptation investment; informal sector; fossil fuel subsidy; time series data; million people; greenhouse gas emission; average interest rate; short-term interest rate; ministries of finance; factor of production; productive capital; government finance statistic; price of export; cost of adaptation; fossil fuel production; real disposable income; benefit of adaptation; equal marginal cost; world market price; early warning system; impact of flood; working age population; outdoor air pollution; labor demand elasticity; increase in temperature; rate of growth; natural gas loss; domestic market price; national account; total government spending; import of goods; determinants of investment; urban heat island; energy price index; government wage bill; local currency terms; sea level rise; cost benefit analysis; real government consumption; real private investment; elasticity of export; disaster risk management; health care spending; price for oil; snow and ice; local climate change; information analysis; global carbon emission; economies of scale; adaptation by farmers; transmission and distribution; provision of infrastructure; burning fossil fuel; low oil price; renewable energy production; adaptation to flood; climate-related disaster; price for electricity; adaptation in agriculture; water storage reservoir; flood management planning; increase in risk; reservoir storage capacity; general equilibrium model; behavior of firms; wastewater treatment plant; real interest rate; long-run elasticity; share of debt; social accounting matrix; effect of temperature; outstanding government debt; changes in demographics; total capital stock; types of capital; impacts of adaptation; irrigation and drainage; stock of debt; impacts of drought; debt service costs; loss in productivity; effective tax rate; fossil fuel taxes; value-added tax; private sector borrowing; effectiveness of adaptation; error correction model; reduced air pollution; redistribution of resource; cause of death; extreme climate events; cost of labor; notion of equilibrium; total factor productivity; ischemic heart disease; Oil and Gas; Oil & Gas; direct tax rate; indoor air pollution; sum of emission; bilateral exchange rate; disability-adjusted life; open market operation; nominal interest rate; air pollution death; value of capital; refined petroleum product; coke oven products; cumulative distribution function; renewable energy price

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