Projections of Economic Impacts of Climate Change in Sectors of Europe Based on Bottom-up Analysis – PESETA
The objective of the PESETA project is to make an assessment of the monetary estimated impacts of climate change in Europe, based on bottom-up or sectoral physical assessments, given the state-of-the-art of today’s methods and knowledge on the physical impacts of climate change.
The objective of the PESETA project is to make an assessment of the monetary estimated impacts of climate change in Europe, based on bottom-up or sectoral physical assessments, given the state-of-the-art of today’s methods and knowledge on the physical impacts of climate change. It will try to achieve a relatively complete and consistent vision of the monetary valuation of the expected impacts of climate change in Europe, potentially useful for policymakers. The purpose is not to give single values of damage or impact of climate change, but to present plausible ranges, and explain them.
The PESETA project is divided into a series of sectoral studies focusing on the following impact categories: human health, coastal systems, agriculture, tourism, and energy demand. FEEM, together with the Universities of Hamburg and Southampton, is in charge of the studies on coastal systems.
Estimates of the physical impacts of sea-level rise on coastal areas and their direct economic costs both in terms of damage and possible adaptation are based on the DIVA 1.0 model. DIVA allows all the major direct impacts of sea-level rise (erosion, increased flood risk and inundation, coastal wetland loss and change and salinisation) to be quantitatively evaluated in physical terms, and monetarised. For the first time, adaptation is an explicit part of the model and a range of adaptation options can be explored, including options from no protection to total protection and an estimate of the economically-optimal response using benefit-cost analysis. Direct costs, however, ignore the impact on prices, on infrastructural investments and ultimately on all those maket feedbacks that determine the final GDP impact. These are accounted for by applying, starting from information provided by DIVA, the FEEM ICES computable general equilibrium model.