Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan
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 importanc...
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World Bank, Washington, DC
2021
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okr-10986-363072021-09-28T05:10:40Z Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan Burns, Andrew Jooste, Charl Schwerhoff, Gregor CLIMATE CHANGE CARBON PRICING ECONOMIC MODELING 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. 2021-09-27T21:18:06Z 2021-09-27T21:18:06Z 2021-09 Working Paper http://documents.worldbank.org/curated/undefined/747101632403308927/Climate-Modeling-for-Macroeconomic-Policy-A-Case-Study-for-Pakistan http://hdl.handle.net/10986/36307 English Policy Research Working Paper;No. 9780 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper South Asia Pakistan |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
CLIMATE CHANGE CARBON PRICING ECONOMIC MODELING |
| spellingShingle |
CLIMATE CHANGE CARBON PRICING ECONOMIC MODELING Burns, Andrew Jooste, Charl Schwerhoff, Gregor Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan |
| geographic_facet |
South Asia Pakistan |
| relation |
Policy Research Working Paper;No. 9780 |
| description |
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. |
| format |
Working Paper |
| author |
Burns, Andrew Jooste, Charl Schwerhoff, Gregor |
| author_facet |
Burns, Andrew Jooste, Charl Schwerhoff, Gregor |
| author_sort |
Burns, Andrew |
| title |
Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan |
| title_short |
Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan |
| title_full |
Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan |
| title_fullStr |
Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan |
| title_full_unstemmed |
Climate Modeling for Macroeconomic Policy : A Case Study for Pakistan |
| title_sort |
climate modeling for macroeconomic policy : a case study for pakistan |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/undefined/747101632403308927/Climate-Modeling-for-Macroeconomic-Policy-A-Case-Study-for-Pakistan http://hdl.handle.net/10986/36307 |
| _version_ |
1764484976595697664 |