What is Nature worth? Quantifying the economic impacts of climate-induced ecosystem damages using the MIMOSA model

Abstract

The global economy is embedded in Nature, with more than half of the world’s total GDP moderately or highly dependent on ecosystem services (Nature Risk Rising, 2020), and climate change impacts ecosystem health creating potential economic repercussions through the loss of ecosystem service value. Therefore, modelling of the impact of climate change on the economy is crucial in supporting policymaking. The MIMOSA Integrated Assessment Model (IAM) balances the cost of climate policy with the benefits of reduced climate damages, using optimisation to do cost-benefit analysis on a global scale up to 2100 (van der Wijst et al., 2021). However, it does not account for all ecosystem services and overall there is a lack of models that connect ecosystem service value losses due to climate change to economic projections, which means that data is missing on the real economic worth of climate mitigation policies (Bastien-Olvera & Moore, 2021). In this thesis, after a conducting a literature survey and five interviews to scope out existing research, a process to integrate climate impact on ecosystem service value into the MIMOSA model was designed and then implemented. This integration combines climate impact on plant ecosystem outputs from the VegClim Dynamic Global Vegetation Model (DGVM) and ecosystem service valuation data from the ESVD global database, to add a new damage function to the model. However, it is a first step towards a complete integration of ecosystem services in MIMOSA as it only includes three selected services (air filtration, recreation, and existence value) for the tropical forest biome. When accounting for these services, optimal global temperature reached in 2100 is lower and the value of these services is higher, with a 0.1°C decrease when using mean values and adding the standard deviation for the services. A reduction of 0.1°C corresponds to 14% more climate mitigation globally from 2020 to 2100. Therefore, when considering an optimal economic trajectory, climate mitigation becomes more valuable when these services are accounted for compared to when they are not. Pathways to improve on this integration are also presented, ranging from adding more ecosystems and services, to connecting biodiversity model output to economic losses. In light of the current setbacks in climate mitigation policymaking, it is more important than ever to provide decision-makers with economic projections that accurately account for the value of Nature and its services (Emissions Gap Report, 2024).