Macroeconomic Impacts of Climate Change, Climate Adaptation, and Climate Mitigation in Germany

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

General Comments:

The article proposes an integrated modeling of mitigation, adaptation, and the effects of climate change within a macroeconomic framework. In this way, this approach moves beyond the common tendency to analyze each dimension separately. A relevant finding is that: The model results also help to understand the interaction between mitigation and adaptation: without effective and consistent mitigation, the impact of the climate crisis will increase significantly. The authors emphasize the need for a comprehensive, holistic perspective, which is appropriate, given the complexity and interconnection of the impacts.

 

However, the absence of a research question, an explicit hypothesis, and a theoretical discussion to frame the study limits its analytical depth. Indeed, the text lacks a clear formulation of a research question or hypothesis to guide the analysis. The justification for the study—based on the supposed scarcity of works integrating the various dimensions of climate change, mitigation, and adaptation—is overly general, as it does not present the debates or specific gaps in the literature.

The article employs the PANTA RHEI macroeconomic model for Germany, which incorporates an input-output matrix. This suggests it can be a useful tool for evaluating broad economic impacts. However, as George Edward Pelham Box (1976) warned, “Since all models are wrong the scientist cannot obtain a ‘correct’ one by excessive elaboration,” which calls for careful consideration of the model’s assumptions and limitations. It would be advisable to elaborate further on the characteristics of the PANTA RHEI model in order to better assess the robustness of the results.

A significant limitation—acknowledged by the authors themselves—is the exclusion of negative impacts that are difficult or impossible to quantify monetarily, such as loss of quality of life, long-term psychological effects, trauma, or biodiversity loss. This raises two critical questions: could the excluded factors, in monetary terms, be more significant than those included? More importantly, might the excluded impacts be more relevant from a social and environmental perspective? This underscores the importance of recognizing the limitations of monetary quantification of environmental damage.

Specific Comments:
– The concept of “economic development” is neither defined nor operationalized, making it difficult to assess the relevance of the expected results.
– The abstract should clearly state the main findings and specify the article’s unique contribution in relation to other studies on the macroeconomic impacts of climate change.
– The article would be strengthened by a discussion on environmental justice, as this would better contextualize the social and ecological impacts of the case and deepen its ethical and distributive dimensions.
– Line 28: The discount rate warrants a more in-depth discussion, as its application decisively influences the estimation of climate change costs. A high discount rate can significantly underestimate future damages when bringing them to present value, leading to a misinterpretation of the urgency and effectiveness of mitigation measures.
– Lines 341–354: Conventional tools that assess environmental damage solely in monetary terms overlook non-monetizable impacts and neglect the importance of multi-criteria assessments. These aspects can be more effectively captured through multi-criteria analysis. This approach is one of the contributions of the interdisciplinary field of Ecological Economics and could be incorporated into the discussion.
– The lack of a conclusion section prevents the reader from evaluating whether the proposed objectives were met, which weakens the potential contribution of the paper.

References
Box, G. E. P. (1976). Science and Statistics. Journal of the American Statistical Association, 71(356), 791–799.

 

Author Response

Comment 1:

The article proposes an integrated modeling of mitigation, adaptation, and the effects of climate change within a macroeconomic framework. In this way, this approach moves beyond the common tendency to analyze each dimension separately. A relevant finding is that: The model results also help to understand the interaction between mitigation and adaptation: without effective and consistent mitigation, the impact of the climate crisis will increase significantly. The authors emphasize the need for a comprehensive, holistic perspective, which is appropriate, given the complexity and interconnection of the impacts.

However, the absence of a research question, an explicit hypothesis, and a theoretical discussion to frame the study limits its analytical depth. Indeed, the text lacks a clear formulation of a research question or hypothesis to guide the analysis. The justification for the study—based on the supposed scarcity of works integrating the various dimensions of climate change, mitigation, and adaptation—is overly general, as it does not present the debates or specific gaps in the literature.

Response 1:

Thank you very much for the helpful comment. We specified the research questions at the end of the introduction (Lines 109-114) and clearly stated the new contributions of our paper (Lines 115-123). The points are further addressed in the discussion and conclusions sections.

 

Comment 2:

The article employs the PANTA RHEI macroeconomic model for Germany, which incorporates an input-output matrix. This suggests it can be a useful tool for evaluating broad economic impacts. However, as George Edward Pelham Box (1976) warned, “Since all models are wrong the scientist cannot obtain a ‘correct’ one by excessive elaboration,” which calls for careful consideration of the model’s assumptions and limitations. It would be advisable to elaborate further on the characteristics of the PANTA RHEI model in order to better assess the robustness of the results.

Response 2:

The comment rightly addresses the problem that complex models are, to a certain extent, a black box. We have therefore added information in section 2 about the macroeconometric model type and specifically about the PANTA RHEI model, showing that this model type has already been used for a wide range of questions and what characteristics it has (Lines 129-157). We have also included the reviewer's reference (Lines 158 f.) to make it clear to the reader that these are model analyses that are subject to uncertainty. However, such models are important and recognized tools for quantifying and evaluating climate policy.

 

Comment 3:

A significant limitation—acknowledged by the authors themselves—is the exclusion of negative impacts that are difficult or impossible to quantify monetarily, such as loss of quality of life, long-term psychological effects, trauma, or biodiversity loss. This raises two critical questions: could the excluded factors, in monetary terms, be more significant than those included? More importantly, might the excluded impacts be more relevant from a social and environmental perspective? This underscores the importance of recognizing the limitations of monetary quantification of environmental damage.

Response 3:

Thank you very much for this very appropriate comment. In the original text, we already discussed the significance of effects of climate change that are not or difficult to monetize before Table 4. In line with the reviewer's comments, we have included the significance of multi-criteria analysis and the consideration of equity issues (Lines 419-421). We have also added a sentence in the conclusions stating that the effects are limited to quantifiable monetary impacts and that the effects of climate change are therefore underestimated; and the positive effects of adaptation and climate mitigation are underestimated as well (Lines 520-526).

 

Comment 4:

– The concept of “economic development” is neither defined nor operationalized, making it difficult to assess the relevance of the expected results.

Response 4:

Thank you for the valid point. Economic development refers to economic growth in the form of GDP. This is clearly described in the document (Lines 9-11, 38, 117f.).

 

Comment 5:

– The abstract should clearly state the main findings and specify the article’s unique contribution in relation to other studies on the macroeconomic impacts of climate change.

Response 5:

We have adjusted the abstract accordingly (Lines 9-24).

 

Comment 6:

The article would be strengthened by a discussion on environmental justice, as this would better contextualize the social and ecological impacts of the case and deepen its ethical and distributive dimensions.

Response 6:

We have briefly included the discussion on environmental justice in the Discussion section (Lines 492-499) and the Conclusions (Lines 520-522). We see this primarily as an indication of the need for further research to address these aspects more thoroughly in more detailed analyses.

 

Comment 7:

– Line 28: The discount rate warrants a more in-depth discussion, as its application decisively influences the estimation of climate change costs. A high discount rate can significantly underestimate future damages when bringing them to present value, leading to a misinterpretation of the urgency and effectiveness of mitigation measures.

Response 7:

In the introduction, we briefly addressed the role of the discount rate and classified it regarding the results. Together with the additions on non-monetizable effects, this addition makes the urgency and effectiveness of mitigation and adaptation measures clearer in the conclusions (Lines 56-60).

 

Comment 8:

– Lines 341–354: Conventional tools that assess environmental damage solely in monetary terms overlook non-monetizable impacts and neglect the importance of multi-criteria assessments. These aspects can be more effectively captured through multi-criteria analysis. This approach is one of the contributions of the interdisciplinary field of Ecological Economics and could be incorporated into the discussion.

Response 8:

In the discussion section (Lines 419-421) and in the conclusions (Lines 524-526), we briefly touched on the multi-criteria analysis, which can very well complement the model-based analysis we conducted.

 

Comment 9:

– The lack of a conclusion section prevents the reader from evaluating whether the proposed objectives were met, which weakens the potential contribution of the paper.

Response 9:

We have combined conclusions that were previously part of the discussion section with additional conclusions, also inspired by comments from the reviewers, into a separate section. In this section, we also address the more specific research questions (Lines 500-526).

Reviewer 2 Report

Comments and Suggestions for Authors

The topic is interesting, and the research questions are ambitious. The paper is well written. The article performs different runs of the Panta Rhei model to test different scenarios involving climate change, climate change mitigation and climate change adaptation policies. However, the macroeconomic model used appears as a black box from which the results are derived. The authors need to discuss the key assumptions of the Panta Rhei model further and investigate the sensitivity of their results to these assumptions. The same applies to the different scenarios considered; the paper would benefit from performing sensitivity analysis on these scenarios. More importantly, apart from running a pre-existing macroeconometric model and reporting the results, the authors should further highlight their original contributions. In fact, the extent of the original contributions remains unclear.

Author Response

Comment 1:

The topic is interesting, and the research questions are ambitious. The paper is well written. The article performs different runs of the Panta Rhei model to test different scenarios involving climate change, climate change mitigation and climate change adaptation policies. However, the macroeconomic model used appears as a black box from which the results are derived. The authors need to discuss the key assumptions of the Panta Rhei model further and investigate the sensitivity of their results to these assumptions.

Response 1:

As already described for reviewer 1, who made a similar comment, we have described the macroeconometric model type and the Panta Rhei model with various characteristics in more detail. The model itself, as well as other models of this type, have already been used in various applications to quantify climate change and climate policy, so comprehensive sensitivity analyses would go beyond the scope of this paper (Lines 129-157).

 

Comment 2:

The same applies to the different scenarios considered; the paper would benefit from performing sensitivity analysis on these scenarios.

Response 2:

We are happy to take up the request for sensitivity calculations and have performed two sensitivity analyses, one for the costs of climate change against the background of the effectiveness of adaptation measures and one for the question of the additionality of climate protection measures, and have briefly supplemented the results (Lines 173-175, 180 f., Table1, 234-240, 247-249, 331-336, 376f., 481-484).

 

Comment 3:

More importantly, apart from running a pre-existing macroeconometric model and reporting the results, the authors should further highlight their original contributions. In fact, the extent of the original contributions remains unclear.

Response 3:

We have specified the research questions at the end of the introduction and clearly stated the new contributions of our paper (Lines 109-123). The points are further addressed in the discussion and conclusions sections.

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

the changes answer my concerns and significantely improve the paper.