Economic impacts of climate change considering individual, additive, and simultaneous changes in forest and agriculture sectors in Canada: A dynamic, multi-regional CGE model analysis

• We assess economic impacts of climate change in both forestry and agriculture sectors.
• Multi-regional CGE model is defined for 13 regions.
• Climate change impacts on agricultural land services and stumpage are considered.
• Both negative and positive additive impact biases exist in a majority of regions.
• Simultaneous sectoral analysis is recommended while using CGE models.

Computable general equilibrium (CGE) model analyses of economic impacts from climate change have often focused on individual impacted sectors such as forest. However, such an approach may not provide accurate economic impact estimates since climate change will affect multiple sectors simultaneously. Furthermore, imprecise aggregate economic impact estimates may result if one were to add together individual sector impact estimates. We used CGE models to compare economic impacts of individual, additive, and simultaneous climate-induced changes in Canadian and other regions' forest and agriculture sectors over the 2006–2051 period. We found negative additive impact biases in a majority of regions for five of our economic variables including GDP, income, imports, terms of trade, capital, and total output. Positive additive impact biases were found in a majority of regions for four economic variables including welfare, consumption, export, and labor. These findings emphasize the importance of considering impacted sectors simultaneously when using CGE models to evaluate the economic impacts of climate change.