An Analysis of Adaption Policies to Climate Change: Gdyn-W Model

2019:159
JEL Classification : C68, Q15, Q25
Publication Year : 2019

This paper develops a dynamic CGE-Water (Gdyn-W) model to analyse the effectiveness of adaptation policies to climate change. In the model, water is introduced as an explicit primary factor of production used for irrigation purposes. For empirical analysis, we employ the latest GTAP database version 9 focusing on the South Asian countries: Bangladesh, India, Nepal, Pakistan and Sri Lanka. Our simulation results revel that the domestic production in all the countries under analysis decreases after the temperature rises by 1 °C until 2040. However, such production losses can be reduced greatly by the adaptation policy to climate change. The costs associated with such a policy are marginal compared to the overall benefits from such a policy.