Spatially-Explicit Economic Impacts and Risks of Climate Change in Europe

This paper improves climate-impact assessment for Europe by integrating NUTS-2 level damage functions from the ICES computable general equilibrium model into the spatially explicit CLIMRISK integrated assessment model. The framework combines market damages, spatial GDP projections, temperature change, and urban heat island (UHI) effects under multiple probabilistic climate and socioeconomic scenarios. Results show that aggregate European damages are broadly consistent with the RICE model, but the ICES damage functions help highlight the sub-national impact heterogeneity. The largest relative losses are expected to ocur in regions of southern Europe (Spain, Italy, Greece), particularly in urban areas. UHI effects account for about 40% of total discounted damages and substantially increase city-level risks.