Estimating A Cost Effective Of Climate Change Adaptation Policy In Algeria: A Dcge Model Analysis

Abstract

The main objective of this study is to find the impacts of the climate change adaptation policy and its associated costs on macro-economic variables such as real gross domestic product, government expenditure, exports, net consumption and sectoral output. This study considered temperature change as an exogenous shock and simulated the effects of adaptation policies over 100 years period based on the 2009 base year Social Accounting Matrix for the Algerian economy. We examined the policy effectiveness by simulating scenarios with and without adaptation options. We investigated the findings of this study using our CGE model called Algerian Integrated Climate and Economy and interpreted to establish whether the adaptation policy is effective in terms of reducing the climate change monetary impact. Our findings indicate that the optimum level of adaptation varies over time with continued economic growth and the costs of adaptation tend to increase as well. Findings show that over the hundred-year projection period, the optimum level of adaptation tends to be within the range of 11 to 29 percent of gross damages. The associated costs of adaptation varies from 27 million to 1,235 million DZD. This indicates that the optimal adaptation policy is effective for Algeria.