Assessing the economy-wide effects of climate change adaptation options of land transport systems in Austria

Due to climate change, transport systems are expected to become increasingly stressed by extreme weather and gradual climatic changes, resulting in direct costs within the affected sectors as well as indirect costs from sectoral interlinkages. To reduce these costs, sector-specific climate change adaptation measures are needed, raising the question of the net benefits of adaptation at a macroeconomic level. However, despite their importance such assessments of impacts and adaptation at the macrolevel are scarce and coarse in their implementation. This paper contributes to fill this research gap by analyzing specific adaptation measures for the road and rail sectors in Austria using a computable general equilibrium model. The findings are as follows: First, direct impact costs more than double due to macroeconomic linkages. Hence, the indirect costs are found to be larger than the direct costs. Second, when analyzing adaptation measures for the road and rail sectors, without capturing any indirect effects, benefit-cost ratios imply a clear benefit only for the rail sector. However, when indirect effects via sectoral interlinkages are also captured, adaptation measures in both sectors, road and rail, clearly pay off. Climate change-induced GDP and welfare losses are reduced by 55 and 34% and lead to positive employment effects. Third, even at rather low damage reduction potentials, adaptation leads to a net benefit at the macroeconomic level.