Evaluating the Macroeconomic Costs of Climate Change in Canada

The document details the technical approach for modeling the macroeconomic effects of climate change on Canada's GDP, employment, and welfare. Using the gTech model, researchers integrated 13 categories of climate impacts—ranging from agricultural productivity and forestry reductions to infrastructure damages and healthcare spending—across 14 climate scenarios (RCP4.5 and RCP8.5) and three asset growth scenarios. The methodology distinguishes between impacts modeled as productivity changes (e.g., labour and agriculture) and those modeled as direct capital expenditures (e.g., road and building repairs), with the latter scaled based on historical asset appreciation relative to GDP. The report identifies weather-related disasters as the largest determinant of overall macroeconomic impact and notes limitations regarding the deterministic nature of disaster modeling and the exclusion of migration and trade restrictions.

• The analysis utilized the gTech computable general equilibrium (CGE) model, which represents economic activity across all Canadian provinces, territories, and the United States, customized to run in 10-year increments from 2015 to 2095.
• The modeling incorporated 14 different climate change scenarios based on two global emissions pathways (RCP4.5 and RCP8.5) and seven downscaled global climate models, resulting in 84 total simulated scenarios plus a reference case.
• Weather-related disasters were identified as the primary driver of macroeconomic impacts, with estimated costs to 2015 infrastructure averaging $57 billion per year in the 2090s under the RCP8.5 scenario.
• Climate impacts were categorized into two modeling approaches: productivity changes (where costs grow with the sector's size) and direct capital/operating expenditures (where costs are scaled by the growth of physical assets).
• To account for the fact that residential buildings historically appreciate faster than the overall economy, the model adjusted climate damages to grow at approximately 1.2 times the rate of GDP.
• The model accounts for potential economic benefits from climate change, such as increased agricultural productivity for certain crops and a potential increase in foreign tourism arrivals as high-latitude climates become more temperate.
• The study focused on the direct economic impacts of premature deaths—specifically reduced labour force participation—and explicitly excluded non-monetary emotional costs to welfare.
• A significant limitation of the current methodology is its deterministic approach to disasters, which uses expected annual costs rather than stochastic modeling to account for catastrophic extreme events.
• The analysis did not consider the potential for interprovincial or international migration, which the authors suggest would likely mute national macroeconomic impacts while increasing regional effects.

APA

Canadian Climate Institute (2022). Evaluating the Macroeconomic Costs of Climate Change in Canada. https://climateinstitute.ca/wp-content/uploads/2022/09/Evaluating-macroeconomic-costs-climate-change-canada.pdf

Chicago

Canadian Climate Institute. Evaluating the Macroeconomic Costs of Climate Change in Canada. 2022. https://climateinstitute.ca/wp-content/uploads/2022/09/Evaluating-macroeconomic-costs-climate-change-canada.pdf.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=Evaluating the Macroeconomic Costs of Climate Change in Canada |date=19 March 2022 |url=https://climateinstitute.ca/wp-content/uploads/2022/09/Evaluating-macroeconomic-costs-climate-change-canada.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2022evaluating, author = {{Canadian Climate Institute}}, title = {{Evaluating the Macroeconomic Costs of Climate Change in Canada}}, institution = {Canadian Climate Institute}, year = {2022}, month = mar, url = {https://climateinstitute.ca/wp-content/uploads/2022/09/Evaluating-macroeconomic-costs-climate-change-canada.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }