The global economic impacts from permafrost thawing in the Arctic region

Alvarez, Jimena (2023) The global economic impacts from permafrost thawing in the Arctic region. PhD thesis, Lancaster University.

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Abstract

The Arctic is warming at more than double the global average. This has resulted in physical impacts in the region including the melting of perennially frozen ground (permafrost) which holds almost twice the carbon in the atmosphere. Permafrost thawing is not explicitly modelled in most of the latest climate models, which informs the Intergovernmental Panel on Climate Change Sixth Assessment Report (AR6). Hence, the temperature projections from AR6 which are extensively used to inform policymakers and stakeholders in the public and private sector, could underestimate the projected physical and economic impacts. This thesis makes three contributions. First, it introduces a framework for assessing the global economic impacts from climate change in the Arctic region. Second, it describes PAGE22, an integrated assessment model which was developed to incorporate a permafrost carbon emulator and the persistent effects of temperature on economic production. The latter is complementary to the PAGE-ICE IAM which only includes level effects and smaller economic damage estimates than PAGE22. Third, it describes PAGE22-SCCO2, another version of PAGE22 to estimate the social cost of carbon dioxide - used as a proxy for carbon tax in policy. The permafrost carbon feedback modelled in PAGE22 increases the mean temperature values in 2300 by 0.17-0.38 °C and the social cost of carbon dioxide by 2-9% under the SSPX-RCPY scenarios. The persistent effects of temperature on economic production increase the mean global impacts in 2200 from 1-53 USD trill. to 104-1,000 USD trill. and the social cost of carbon dioxide in 2020 up to almost 9 times under the SSPXRCPY scenarios. Through these contributions, this thesis expands the body of literature on climate change economic impacts. The tools developed can be used to assess how the physical impacts from climate change in the Arctic and beyond can translate into regional and global economic impacts.