A macroeconomic analysis of adaptation to climate change impacts on forests in India

Abstract

We examine the potential for adaptation to climate change in Indian forests, and derive the macroeconomic implications of forest impacts and adaptation in India. The study is conducted by integrating results from the dynamic global vegetation model IBIS and the computable general equilibrium model GRACE-IN, which estimates macroeconomic implications for six zones of India. By comparing a reference scenario without climate change with a climate impact scenario based on the IPCC A2-scenario, we find major variations in the pattern of change across zones. Biomass stock increases in all zones but the Central zone. The increase in biomass growth is smaller, and declines in one more zone, South zone, despite higher stock. In the four zones with increases in biomass growth, harvest increases by only approximately 1/3 of the change in biomass growth. This is due to two market effects of increased biomass growth. One is that an increase in biomass growth encourages more harvest given other things being equal. The other is that more harvest leads to higher supply of timber, which lowers market prices. As a result, also the rent on forested land decreases. The lower prices and rent discourage more harvest even though they may induce higher demand, which increases the pressure on harvest. In a less perfect world than the model describes these two effects may contribute to an increase in the risk of deforestation because of higher biomass growth. Furthermore, higher harvest demands more labor and capital input in the forestry sector. Given total supply of labor and capital, this increases the cost of production in all the other sectors, although very little indeed. Forestry dependent communities with declining biomass growth may, however, experience local unemployment as a result.

Assessing the economy-wide effects of climate change adaptation options of land transport systems in Austria

“…Aaheim et al (2011Aaheim et al ( , 2012, for example, include adaptation, but only to a very limited extent: Solely pricedriven changes in demand are included-also called autonomous adaptation-but any institutional and/or infrastructural changes are neglected. Another caveat of Aaheim et al (2011Aaheim et al ( , 2012 is the inability to decompose the effects between impacts and autonomous adaptation as both happens at the same time within the same endogenous optimization procedure. In contrast, planned adaptation actively changes structures in order to reduce climate change impacts either through operational and institutional changes 1 or by building new and adapting existing infrastructure.…”