Several major long-term trends shape the potential for economic growth around the world. The continued depletion of natural capital features prominently among these trends, manifesting itself through environmental pollution, the emission of greenhouse gases (GHGs) that contribute to climate change and continued dependence on increasingly scarce natural resources. It is clear that further degradation of the environment and natural capital can compromise prospects for future economic growth and human well-being.
the circle project
The OECD CIRCLE project focused on the costs of environmental inaction by quantifying the economic feedbacks from environmental impacts to 2060. The project focused on a range of environmental domains and provided quantitative assessments on three specific issues: climate change, air pollution and on the land-water-energy nexus.
KEY CIRCLE publications
- The Land-Water-Energy Nexus: Biophysical and Economic Consequences – This report contributes to the discussion of interconnections between scarce resources by highlighting the nexus between land, water and energy (the LWE nexus). It focuses on a dynamic, integrated, and disaggregated analysis of how land, water and energy interact in the biophysical and economic systems. The report provides projections for the biophysical and economic consequences of nexus bottlenecks until 2060, highlighting that while the LWE nexus is essentially local, there can be significant large-scale repercussions in vulnerable regions, notably on forest cover and in terms of food and water security.
- The Economic Consequences of Outdoor Air Pollution – Unless more stringent policies are adopted, findings point to a significant increase in global emissions and concentrations of air pollutants, with severe impacts on human health and the environment. The impacts of outdoor air pollution are projected to lead to significant economic costs, which are illustrated at the regional and sectoral levels, and to substantial annual global welfare costs.
- The Economic Consequences of Climate Change – This report provides a new detailed quantitative assessment of the consequences of climate change on economic growth through to 2060 and beyond. It focuses on how climate change affects different drivers of growth, including labour productivity and capital supply, in different sectors across the world. The sectoral and regional analysis shows that while the impacts of climate change spread across all sectors and all regions, the largest negative consequences are projected to be found in the health and agricultural sectors, with damages especially strong in Africa and Asia.
key areas of work
- 4th Ad-hoc Technical Workshop of the CIRCLE project on air pollution (2016 - Stockholm) | Agenda
- 3rd Ad-hoc Technical Workshop of the CIRCLE project (2015 - OECD, Paris) | Agenda
MORE CIRCLE publications
- Economic interactions between climate change and outdoor air pollution - This paper presents the first global analysis with a common modelling framework of the joint economic consequences of climate change and outdoor air pollution to 2060, in the absence of new policies to address these challenges.
- International trade consequences of climate change – This report provides an analysis of how climate change damages may affect international trade in the coming decades and how international trade can help limit the costs of climate change. It analyses the impacts of climate change on trade considering both direct effects on infrastructure and transport routes and the indirect economic impacts resulting from changes in endowments and production.
- Approaches and issues in valuing the cost of inaction of air pollution on human health – This report presents a review of existing approaches to estimate the costs of inaction, as well as the benefits of policy action, for air pollution. It focuses primarily on health impacts from air pollution; and the “impact pathway approach”, which includes various steps in the analysis of the costs of air pollution.
- Implications of water scarcity for economic growth – This report provides a detailed review of the literature on water, water scarcity, sectoral activity and economic growth, and identifies the possibilities and bottlenecks in incorporating water use into a Computable General Equilibrium (CGE) framework.
- Critical minerals today and in 2030: an analysis for OECD countries – This report provides an analysis of 51 critical minerals for the OECD countries as a whole, both today and in 2030, in order to identify how possible trends in economic development will affect minerals criticality in the future.
- The Economic Feedbacks of Loss of Biodiversity and Ecosystems Services – This report contributes to an effort to identify environmental pressures under different structural and environmental policy assumptions and the associated damages that will result under different economic scenarios to 2050; and aims to examine how the environmental pressures may affect economic growth paths.
- Integrated Assessment of Climate Change Impacts: Conceptual Frameworks, Modelling Approaches and Research Needs – This paper presents a framework to include feedbacks from climate impacts on the economy in integrated assessment models.
- Consequences of Climate Change Damages for Economic Growth: A Dynamic Quantitative Assessment – This report focuses on the effects of climate change impacts on economic growth. Simulations with the OECD’s dynamic global general equilibrium model ENV-Linkages assess the consequences of a selected number of climate change impacts in the various world regions at the macroeconomic and sectoral level.
- The CIRCLE work is led by the Environment and Economy Integration Division in the OECD Environment Directorate. For more information, contact:
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