Assessing the Impacts of Climate Change on Arctic Infrastructure in a Neoclassical Regional Economic Growth Model

Lead Author Dmitry V., Kovalevsky
Institution Contact Nansen International Environmental and Remote Sensing Centre (NIERSC) 14th Line 7, office 49, V.I., 199034 St. Petersburg, RUSSIA
Theme Theme 2: Vulnerability of Arctic Societies
Session Name 2.3 Current infrastructural Challenges, extreme weather and natural hazards and the effects on northern communities
Datetime Wed, Sep 14, 2016 11:15 AM - 11:30 AM
Presentation Type Oral
Abstract text The costs of maintaining public infrastructure in many Arctic regions are substantial even without climate change. However, climate damages caused by projected Arctic warming (notably through thawing permafrost) can dramatically increase the public infrastructure costs. To assess the efficacy of adaptation measures, we develop a neoclassical regional economic growth model with two types of capital entering the production function as factors of production: the private capital and the public capital (equivalent to public infrastructure in the presented model setup). Both capital stocks can be increased by investment. At the same time, both capital stocks are subject to depreciation with climate-dependent depreciation rates. The depreciation rates increase with growing regional temperature (chosen as a proxy for regional climate change). The temperature projections are taken as exogenous. The model allows assessing the efficacy of increased investment in public infrastructure adversely affected by climate change under different exogenous temperature scenarios.
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