Conference Agenda

We develop a global structural transformation integrated assessment model to study the interactions between the sectoral reallocation of economic activity, climate change and mitigation policies. The model integrates climate-economy interactions and sectoral heterogeneity in climate vulnerabilities and mitigation capabilities. We quantify distributional effects across regions and sectors due to damages from climate change and global coordination of mitigation efforts. We find that damages lead to regional variations in labor reallocation, with lower-income regions experiencing large shifts into the agriculture sector. Global coordination of mitigation efforts leads to a decrease in global CO2 emissions, welfare gains for developing regions, and a decrease in emission intensity in all regions. On the sectoral level, we observe a general shift towards services, where production is less emission intensive and substitution of energy sources easier. Sub-Saharan Africa experiences short-term growth in the manufacturing sector in order to increase the investments required to lower damages and sustain economic growth. The contribution of structural transformation in the reduction of emission intensity varies significantly between regions, and depending on if mitigation-related energy system investments are possible. Further results suggest that in low-income countries, increasing climate damages may trap labor in the agricultural sector, threatening to disrupt their development.