The analysis examines impacts on selected sectors and on aggregate indicators such as GDP, employment, consumption, and overall economic welfare. The assessment is based on SSB’s computable general equilibrium (CGE) model for Norway, SNOW, supplemented with external estimates of climate-related costs and benefits. Six climate scenarios are simulated: low, medium, and high climate change outcomes for mid-century (2050), with corresponding scenarios for end-century (2100). Climate impacts are treated as exogenous and affect the Norwegian economy through two main channels: physical changes within Norway (domestic effects) and impacts transmitted through international markets (foreign effects). While foreign effects are discussed, the analysis focuses primarily on domestic effects, reflecting limited data availability for quantifying cross-border impacts, despite their relevance for a small open economy. Domestic climate impacts integrated into the SNOW-model are derived from partial studies, largely commissioned by EKLIM, covering seven main categories: Agriculture, Forestry, Fisheries and Aquaculture, Hydropower, Tourism, Buildings, and Transport Infrastructure. For each category, impacts are specified separately for all six climate scenarios.

The primary objective of the model-based analysis is to capture economy-wide interactions across markets, sectors, and agents. Climate impacts in one sector propagate through value chains, affecting the distribution as well as the overall level of costs. Economic agents respond by reallocating resources and adjusting labor supply, production, and consumption decisions. In many cases, these adjustments by agents are overlapping with socially optimal responses and therefore mitigate the initial cost impacts of climate change. However, interactions also arise between climate impacts and pre-existing economic policies. Such policy-induced distortions can amplify or dampen overall welfare effects. A key example is labor taxation, including personal income taxes and employers’ social security contributions. If climate impacts reduce employment, the associated welfare losses are exacerbated because labor taxation already drives employment below the socially optimal level. Conversely, climate-induced adjustments that raise employment reduce the overall welfare costs. Other policy-related interactions with welfare implications include preferential tax treatment of electricity and labor in trade-exposed industries, restructuring support schemes directed towards certain industries and transportation modes, agricultural and forestry subsidies, and tariff protection for agriculture and food processing.

The SNOW-model represents welfare through the utility of a representative household that receives all income generated in the economy. Changes in household utility therefore provide a comprehensive measure of the socio-economic welfare effects of climate change. Total welfare impacts are decomposed into direct climate effects and interaction effects arising from market responses and policy distortions. For Hydropower, Agriculture, and Forestry, direct climate impacts are positive, but these gains are partly offset by interaction effects, primarily due to resource reallocation toward policy-favored sectors such as agriculture and trade-exposed industries. Transport Infrastructure exhibits the largest direct negative impact, though interaction effects particularly increased employment, moderate the welfare loss. Overall, total welfare losses exceed direct climate costs by more than a factor of two. Reallocation of resources to agriculture, forestry and trade-exposed industries explains most of the welfare loss. We also find that interactions across impact categories are of limited importance relative to interactions between individual climate impacts and existing economic policies, and that aggregate macroeconomic costs increase toward the end of the century unless climate change is constrained to low or medium scenarios.