A macroeconomic assessment of impacts and adaptation to climate change in Europe

This report provides a documentation of the integrated macroeconomic general equilibrium model GRACE_adapt, and presents results from the macroeconomic analysis of impacts and adaptation in Europe in case of a +2 °C and +4 °C increase in global mean temperature. GRACE_adapt has been developed for the ADAM project to address economic impacts of climate change and resulting adaptation, interpreted as the economic responses to climate impacts. The development of the integrated computable general equilibrium model GRACE_adapt represents an attempt to bring consistency between adaptation to climate change and economic behaviour. The model is based on the idea that adaptation to climate change can be interpreted within the context of economic behaviour: Climate change may lead to changes in the availability of economic resources, or shifts in the demand for commodities or services, either from production sectors (shift in technologies) or from final demand (shift in preferences). The resulting shift from one general equilibrium prior to climate change to a new general equilibrium posterior to climate change can be interpreted as adaptation.