Overview

We have developed a spatial general equilibrium model of the world economy that integrates state-of-the-art macroeconomic modelling with the impacts of climate change. Its key features include detailed spatial resolution for modelling (up to 5x5 km pixels) and joint interactions between labour markets, production processes, international trade and consumption decisions influenced by price and income levels. Climate damage affects economic perspectives and thus alters migration patterns at international and internal scales.

Model mechanisms & framework

Our theoretical framework encompasses various modules interacting through key mechanisms:

1. Firms operate across agricultural, industrial and service sectors, optimizing input combinations.

2. Individuals across age, gender and education groups consume sector-specific domestic and imported goods, subject to evolving preferences and price levels.

3. Climate damage impacts labour productivity, crop yields and local amenities through changes in temperature levels, sea-level rise and expected losses due to disasters.

4. Migration  decisions adapt to economic shifts and climate-induced changes, subject to individual-type-specific dyadic costs of moving at various distances.

5. Demographic Demographic dynamics account for fertility, mortality and education, determining future population structures aligned with IPCC’s SSPs.

Our comprehensive model provides insights into the complex interactions between economic decisions, climate change and migration dynamics. By capturing the nuanced behaviours of individuals and firms within a changing climate, it offers valuable perspectives for understanding and addressing future challenges. By compiling and processing diverse datasets, we lay the groundwork for a robust simulation model capable of capturing the complex interplay between economic, demographic and environmental factors.

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Data Compilation for Model Calibration

The calibration of our model necessitates a comprehensive compilation of data spanning socio-economic, geographical, climatic and demographic dimensions. This page outlines the complex procedure involved in gathering and processing diverse datasets to ensure accurate representation of the global economy and robust simulation outcomes.

Country and Regional Mapping

Utilizing maps from GADM, we single out 202 countries and 2,311 administrative units, establishing the geographical framework for our analysis. Population Data

Population Data

We gather population data by age and gender from WorldPop.org and Bondarenko et al. (2020), aggregating it to 5x5 km spatial cells.

Economic Indicators

Disaggregated GDP data from Kummu et al. (2018) informs region-specific value-added computations, cross-validated with World Bank datasets for consistency.

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Sectoral Employment Allocation

Employment shares across sectors are computed based on population and urbanization data, ensuring alignment with World Bank statistics.

Education Distribution

Country-specific education measurements from Barro and Lee (2013) and the World Bank are downscaled to regions, further refined using urbanization data at the pixel level.

Climate Damage Assessment

Impacts on labour productivity due to climate change are calculated using temperature data from WorldClim.org, incorporating future scenarios to estimate productivity losses. Land productivity and crop yield data, alongside sea-level rise projections, enrich our understanding of climate-induced damage. Thorough analysis of disaster data (droughts, floods, cyclones and heat waves) allows us to calibrate expected losses in local amenities resulting from higher intensity and frequency of these extreme weather events.

Productivity and Wage Distributions

Utilizing inputs from various sources, we compute productivity and wage distributions across sectors and pixels, essential for utility and price index calculations.

Migration Patterns

Internal and international migration data are collated from multiple sources, including censuses and international databases, enabling us to derive individual-type-specific dyadic migration costs.

Socio-demographic Projections

Prospective estimates for fertility, education and survival probabilities are accessed from Human Capital Data Explorer, IIASA, allowing us to model the evolving socio-demographic landscape over time consistently with the official IPCC projections.