Economic Impacts of Climate Change in Italy and the Mediterranean: Updating the Evidence

by  Marzio Galeotti and Roberto Roson

This study presents new estimates of economic impacts of climate change for Italy and other countries, obtained with a full-fledged Integrated Assessment Model (ENVISAGE), developed at the World Bank. This model is qualitatively superior to other models used in the past for the same purpose. It is found out that climate change is expected to reduce the Italian GDP in 2050, with respect to a reference baseline, by -0.31%. This figure is about two times higher than previous estimates. Declining tourism demand is the main driver of negative effects on GDP, as Italy would become less attractive as a tourist destination. By the end of the century, however, Italy would also experience severe losses in agricultural production, due to increased temperature and reduced water availability. Even if Italy will notably be affected by climate change, in the absence of any mitigation or adaptation effort, other countries in the Mediterranean will experience larger economic impacts. This is the case of Spain and Middle East-North Africa.