A General Equilibrium Assessment of Climate Change Impacts on Swiss Winter Tourism with Adaptation

Winter alpine tourism has been repeatedly identified as one of the economic sectors most at risk from climate change in Switzerland. However, all of the costs that have been estimated so far for the Swiss tourism sector are, to some extent, misleading as they do not, or only partially, incorporate adaptation possibilities and general equilibrium effects. We attempt to fill this gap using a computable general equilibrium model that is specifically designed for the purposes of this research. Our modeling efforts first consist in creating a tourism sector with a part of it being dependent on snow. We also carefully model the snowmaking technology. Using climate change scenarios on future snow cover, we analyze their impacts on the Swiss ski industry. We find welfare effects for the Swiss economy ranging from -23 to 113 million CHF in 2050. This range arises from the use of various assumptions concerning adaptation possibilities. We also show that geographical substitutions between international ski destinations have large positive effects for Switzerland. From a more general perspective, our results exemplify the risks of estimating the consequences of climate change based only on domestic impacts of climate change with no adaptation being implemented.