Regional economic impacts of climate change and adaptation in Canadian forests: A CGE modeling analysis

We analyzed the potential economic impacts of climate change and adaptation on forests in six regions of Canada over the 2010-80 period. We considered 16 impact scenarios, based on various states of future economic growth conditions, global climate change conditions, timber supply impacts, and adaptation activities. Our findings reveal that the physical and economic impacts of climate change in Canadian forests may be substantial and will not be distributed equally across Canada's regions. For instance, without adaptation, Manitoba. Saskatchewan and the Territories' forestry and logging sector may be hardest hit, losing over 30% of its output value, thereby reducing output and GDP in other sectors by over 18%. On the other hand, provinces such as Quebec and to a lesser extent Ontario could gain up to 2% in their forestry and logging and other sector output and GDP. With adaptation, the negative impacts are reduced and the positive impacts are increased in all regions. In this case, Atlantic Canada in particular could realize output and GDP gains, at up to 2% compared to a no climate change, no adaptation scenario. Net present value analysis indicated that, under all scenarios considered, such adaptation activities as planting new tree species and increasing pest and fire control could be supported on economic grounds. Overall, this analysis can be said to provide the first (and preliminary) estimates of regional economic impacts from climate change in Canadian forests. Further analysis is needed to accurately quantify and model the impacts. (C) 2012 Elsevier B.V. All rights reserved.