I have been reading some chapters from different books like

•    Nordhaus, W. D. and J. Boyer (2000). Warming the world: economic models of global warming. Cambridge, Mass., MIT Press.
•    Sanderson, J. and S. M. N. Islam (2007). Climate change and economic development: SEA regional modelling and analysis. Basingstoke, Palgrave Macmillan.

In these books authors have used CGE modelling to estimate the possible economic impacts of climate change. I think, although these model may be able to capture some aspects of the problem like some direct effects of climate change but (and this but is very important) they are not able to show the possible consequences which are due to interactions and interconnections.

Let me make an example. We all know that climate change is going to cause water stress in some regions. Also we know mass-migration of people is going to happen in some regions. OK! If our CGE model shows that water stress is going to cause 2% GDP loss and mass-migration will cause 1.5% then totally we predict that our special region is going to loss 3.5% of its GDP in the coming years becuase of the changing climate.

This looks simple and straight-forward. But (and again this but is very important) does mass-migration is going to cause some water stress itself and water stress is going to cause more mass-migration? If these internal impacts are going to be effective as much as 30% of the main one then we should correct our estimate to around 4.5% which is a significant increase when we talk about GDP.

My comment is not finished yet. I think mass-migration is going to cause conflict, water stress will as well. So, these both are going to cause some conflicts in the region which those conflicts not only will cause GDP loss but also will cause more mass-migration and more water stress. SEE! There is a cycle here which if this time we say is 30% of the first impact is going to increase our GDP loss to 6%. This is almost twice of what we had predicted first.

I am not going to make it more complicated although I can and I can add more and more features to this model and with some other 30%s which can make the GDP loss several times bigger that what has been estimated first.

OK! This is not a scientific way to just add 30% to an estimation, I know that, but even if there is a place for adding two of these 30% to what current calculations say about climate change then based on what has been predicted by the second reference above, South-east Asian countries are going to lose around 10% of their GDP due to climate change and that is really something. And believe me, this is not the whole story!

I will write about it later.