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Economic Analysis of climate change in Korea

2010. 03. 11.

Yeora Chae Korea Environment Institute

Project Scope

Spatial range : South Korea Time range : by 2050/2100 Study fields :
Agriculture, Forest, Sea level, Disaster, Health impact assessment of climate change Cost estimates of CO2 emissions reductions on energy section

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Objectives
Analysis of Climate change Scenarios of Korea

Estimate of Economic impacts of Climate Change Damage

Analysis of GHG reduction cost and the ripple effect using CGE Model

Cost-benefit integrated model analysis

Estimate of Integrated Economic Impact

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Analysis of Climate Change Scenarios
Analysis of International GHGs Regulations Negotiation and GHGs Emission Scenario Analysis of Climate Change Scenarios of Korea Outlook for Domestic GHGs Emission Control Scenarios

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Estimate of Economic Adverse Impacts of Climate Change
Estimate cost function of climate change
Analyze economic mechanisms of climate change of South Korea Establish damage function of climate change by sector

Agriculture

Forest
• Identify the relationship between climate factors and forest distribution • Estimate forest distribution of South Korea by 2100

Sea level
• Understand physical change status of coast of Korea • Establish coastal change scenario • Estimate protection cost

Disaster
• Current knowledge on the economic costs estimation methodology • Analyze possibility of disaster of Korea

Health

• Literature review for climate change impact assessment • Temperature damage function presumption of major crop plants

• Literature review of health impact of climate change • Estimate excess mortality of climate change (fierce heat, O3 etc.)

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Analysis of GHG reduction cost and the ripple effects using CGE Model
The ripple effects analysis and Cost function estimate of Domestic policy to reduce GHGs emission Economic impact assessment of the change of energy/resources supply-and-demand structure (international/domestic) Analysis of impacts to trade of GHGs regulations

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Cost-benefit integrated model analysis

PAGE model modeling using the economic impact function and reduction cost function Cost estimates of damage and response cost each scenarios Uncertainty assessment of cost estimates

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Climate change in Korea
Climate change scenario

Temperature change: Average temperature would increase 4 2071~2100 compared to 1971-2000 in

Precipitation change Average Precipitation would increase 17% in 2071~2100 compared to 1971-2000

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Agriculture: Rice yield change
• Rice yield change in jeonnam: compared to1971~2000 average rice yield

2001 ▼0.74%

2080s ▼16.5 %

Rice yield= -159.5*temperature + 5330.7 (R2=0.9769)

Rice yield change by temperature (kg/ha)
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Forest : Distribution change
Forest distribution change
5,000
( ha)

Present

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0 1971~2000 2030 2050 2070 2100

년 도연

림합혼
2100
( )

수엽활

수엽침
01

적면

Coastal area
Flooded area by sea level rise
Wet area Flooded area (km2) 2,368 65.15 241.93 393.44 608.86 854.16 0.2m 0.4m 0.6m 0.8m 1.0m

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Coastal area
습지지역 침수면적(km ) 침수인구(명)
2

건조지역
0.2m 상승
65 4 1 ,6 2 5

0.4m 상승
242 1 5 2 ,2 5 4

0.6m 상승
393 2 4 2 ,3 3 3

0.8m 상승
609 3 7 3 ,0 0 3

1m 상승
854 5 1 6 ,9 7 6

2 ,3 6 8 -

Damage by sea level rise and temperature change

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상이 명 자망사과초 일 수일 상이 상이 명 자망사과초 일 수일 상이 시 온고 상이 년 시 온고 상이 년 상이 명 자망사과초 일 수일 상이 상이 명 자망사과초 일 수일 상이 시 온고 상이 년 시 온고 상이 년 하이 명 균평 수자망사과초 일 균평 수일 상이 하이 명 균평 수자망사과초 일 균평 수일 상이 하이 명 균평 수자망사과초 일 균평 수일 상이 하이 명 균평 수자망사과초 일 균평 수일 상이

한상 % 5 9 한하 % 5 9 균평 한상 % 5 9 한하 % 5 9 균평 한상 % 5 9 한하 % 5 9 균평 한상 % 5 9 한하 % 5 9 균평 망사 과초 철름여 망사 과초 철름여 망사 과초 철름여 망사 과초 철름여
ra eY

644 942 97

213 671 65

873 212 76

0012 ~ 1702 0702 ~ 1402 0402 ~ 0102

a eY a eY rrrr a eY a eY

▷28.1▷ (’94

Mortality change by heat wave

Health : Mortality change by heat wave

:

10-15 28.1▷

,

33 ,

:

100 800

)

No. of days daily average temperature above 28.1 °C 이상인 (Seoul)

Ye a r 2010 ~ 2040 2041 ~ 2070 2071 ~ 2100

평균 2 8 .1 ℃ 이상인 날 수 270 571 787

Climate change damage
Agriculture Coastal area Human health
6 .0 0 % 5 .0 0 % GDP loss (%) 4 .0 0 % 3 .0 0 % 2 .0 0 % 1 .0 0 % 0 .0 0 % 1 2 3 4 농업 해안 건강

온도변화 (℃)
41

51

%03

%52

율비축감 소탄화산 이 %02 %51 %01

%5

%0 %00.0 %01.0 %02.0

edarT _0302 edarT -oN _0302 edarT _0202 edarT -oN _0202

%03.0 G D P %04.0 감 소 비 %05.0 율 %06.0 %07.0 %08.0

CO2 mitigation cost: CGE model result : GDP loss

GDP loss by scenario(BAU %)

PAGE model
(Policy Analysis of GHG Emission)

Uses relatively simple equations to approximate complex climatic changes in a minimal number of computations Probabilistic sampling of the input parameters in order to build up an approximate probability distribution for each model output Output includes temperature change, climate change damage, adaptive cost, and preventative cost at a regional level for a given CO2 and SO2 emission scenario Incorporate 5 reasons to concern about climate change impacts

Scope of the PAGE model

•Eight world regions. •The major greenhouse gases. •Economic and non-economic impacts. •Time horizon of 2200. •Probabilistic calculations.

Inputs to the PAGE model
Emissions of greenhouse gases Sensitivity of the climate system Cooling effect of sulphates Impact as a function of temperature change Discount rates

PAGE model - structure
Socio economic factor : :GDP, Population Socio economic factor GDP, Population

Mitigation Policy: Mitigation Policy: Mitigation Cost Mitigation Cost

GHG Emission GHG Emission Ambient GHG Concentration (Carbon Cycle) Ambient GHG Concentration (Carbon Cycle) Temperature Change: Climate Modeling Temperature Change: Climate Modeling (Meteorology, Oceanography) (Meteorology, Oceanography) Impact Analysis Impact Analysis (Economics, Sociology, Ethics) (Economics, Sociology, Ethics) Valuation (Economics, Sociology, Ethics) Valuation (Economics, Sociology, Ethics)

Adaptation Policy: Adaptation Policy: Adaptation Cost Adaptation Cost

Damage Damage

Cost Cost

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Climate change damage calculation in PAGE

Economic

Non-economic

Agriculture Coastal area

Health

Forest

02

Climate change damage by 2.5oC temperature increase

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Climate change damage by 2.5oC temperature increase
지역 대한민국 미국 중국 일본 러시아 다른 고소득 지역 동유럽 중산층 인도 EU 0.45 0.22 0.5 2.83 -0.65 4.93 -0.39 1.95 0.71 2.44 1.81 3.91 2.64 총계 농업 0.027 0.06 -0.37 -0.46 0.49 -0.69 1.08 -0.95 0 0.46 1.13 0.04 0.05 0.04 0 0.13 0 0 -0.37 0.4 -0.31 0.91 0 0.41 0.29 0.09 0.46 다른 취약한 Market 해안 1.485 0.11 0.07 0.56 0.6 0.09 0.09 0.16 0.06 0.01 0.04 0.09 0.02 0.09 건강 0.155 0.02 0.09 0.02 0.02 0.02 0.69 0.02 0.23 0.02 0.32 0.32 3 0.66 -0.28 -0.26 -0.31 -0.43 -0.75 0.3 -0.35 0.24 -0.36 -0.04 -0.04 0.25 0.2 0.44 0.52 0.45 1.91 0.99 2.27 0.94 0.46 0.47 0.47 1.01 0.39 1.09 0.1 0.05 0.25 0.25 0.05 0.1 0.1 0.05 0.1 0.1 0.1 0.1 0.1 Non-Market Time Use 재해 이민

OPEC 고소득지역

저-중소득 지역 저소득지역 전세계 산출 가중치 인구가중치 아프리카

1.5 2.19

0.13 0.17

0.05 0.23

0.32 0.12

0.1 0.56

-0.29 -0.03

0.17 0.1
22

1.02 1.05

Climate change damage calculation in PAGE model
impact function exponent Economic impact NonNon-econ impact 1.766666667 0.5 0.733333333 11.66666667 -0.35 0.25 0.366666667 2.5 1.833333333 1.833333333 0.25 1 -0.1 0 5 -1 0 0 1.5 1 1 0 1.3 0.6 0.7 10 -0.25 0.25 0.1 2 1.5 1.5 0.25 3 1 %GDP loss for 2.5℃ 1.5 %GDP loss for 2.5℃ 20 %GDP 0.2 0.5 1 4 3 3 0.5

EE weights factor

Loss if discontinuity occurs US weights factor

Korea weights factor AF weights factor LA weights factor

IA (inc CA) weights factor

OT weights factor

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Climate change damage calculation in PAGE model
CW (% of 1990 emissions) C2 ($million/Mt CO2)

30 8.43 17.25

50 17.25 29.24

100 31.46 91.83

C1 ($million/Mt CO2)

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Discount rate in PAGE model
Pure time preference rate + equity weight*growth rate of GDP per capita

discount rate =

Stern Review:
ptp rate= 0.1

Nordhaus:
social discount rate= 3%

This study:
ptp rate = triangle distributiom (0.1,1,2)
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PAGE Model result
Climate change damage and GHG mitigation cost
A1B 450 ppm stabilization scenario

CO2 emission in Korea

Temperature change

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PAGE Model result
Climate change damage and GHG mitigation cost

Climate change damage

GHG mitigation cost

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PAGE Model result
Uncertainty and sensitivity analysis of climate change damage

Pdf of cumulative climate change damage

Sensitivity analysis

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PAGE Model result
Uncertainty and sensitivity analysis of GHG mitigation cost

Pdf of cumulative GHG mitigation cost

Sensitivity analysis

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PAGE Model result
• pdf of cumulative climate change damage and GHG mitigation
시나리오 A1B Ag g re ssive Po lic y 기후변화 누적 피해비용 ( m illio n $ ) 5% p e rc e n t ile 33,169 20,059 me a n 819,408 448,259 95% p e rc e n t ile 9,409,995 434,433 3,056 163,506 696,247 온실가스 누적 저감비용 ( m illio n $ ) 5% p e rc e n t ile mean 95% p e rc e n t ile

Net benefit>0: 82% probability

Pdf of damage & control cost
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Pdf of net benefit