Exchange rates and climate change: An application of fund

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

As economic and emissions scenarios assume convergence of per capita incomes, they are sensitivity to the exchange rate used for international comparison. Particularly, developing countries are project to grow slower with a purchasing power exchange rate than with a market exchange rate. Different exchange rates may lead to scenarios with very different per capita incomes. However, these scenarios also assume convergence of energy intensities, which at least partly offsets the income effect, so that scenarios with different exchange rates would differ less in greenhouse gas emissions. Differences become smaller still if atmospheric concentrations and global warming is considered. However, differences become larger again if one considers the costs of meeting a certain stabilisation target, as the gap between baseline and target is more sensitive to the exchange rate used than the baseline itself. Differences also grow larger if one looks at climate change impacts, which are determined not just by climate change but also by development. The sensitivity to the exchange rate is purely due to imperfect data, imperfect statistical analysis of data, a crude spatial resolution, and imperfect models. © Springer 2006.
Original languageEnglish
Pages (from-to)59-80
Number of pages21
JournalClimatic Change
Volume75
Issue number1-2
DOIs
Publication statusPublished - 2006

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Climate change
Exchange rates
Scenarios
Per capita income
Purchasing power
Stabilization
Greenhouse gas emissions
Developing countries
Income effect
Costs
International comparison
Global warming
Statistical analysis
Economics
Energy intensity

Cite this

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title = "Exchange rates and climate change: An application of fund",
abstract = "As economic and emissions scenarios assume convergence of per capita incomes, they are sensitivity to the exchange rate used for international comparison. Particularly, developing countries are project to grow slower with a purchasing power exchange rate than with a market exchange rate. Different exchange rates may lead to scenarios with very different per capita incomes. However, these scenarios also assume convergence of energy intensities, which at least partly offsets the income effect, so that scenarios with different exchange rates would differ less in greenhouse gas emissions. Differences become smaller still if atmospheric concentrations and global warming is considered. However, differences become larger again if one considers the costs of meeting a certain stabilisation target, as the gap between baseline and target is more sensitive to the exchange rate used than the baseline itself. Differences also grow larger if one looks at climate change impacts, which are determined not just by climate change but also by development. The sensitivity to the exchange rate is purely due to imperfect data, imperfect statistical analysis of data, a crude spatial resolution, and imperfect models. {\circledC} Springer 2006.",
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Exchange rates and climate change: An application of fund. / Tol, R.S.J.

In: Climatic Change, Vol. 75, No. 1-2, 2006, p. 59-80.

Research output: Contribution to JournalArticleAcademicpeer-review

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