WP2 - Interaction of Structural Change and Climate Impacts

Drawing on the ifo trade model, this work package addresses the question to which extent the needs and possibilities of structural transformations (e.g. the shift of sectoral production and labor allocation) are affected by climate impacts in the agricultural sector, and what the welfare implications in countries of different economic development status might be. To answer this question, we first analyze the effects of micro-level changes in crop yields induced by climate change on sectoral specialization patterns and trade flows. In a second step, we plan to identify regions particularly vulnerable to the economic consequences of climate change, subject to different climate and trade policy scenarios. The results from this work package are fed into WP 4.5, as adaptations in sectoral specialization and heterogeneity in welfare changes across regions need to be considered when evaluating climate policy instruments.