Flexible Damage Functions

Author

James Rising, Sebastian Cadavid Sanchez, Climate Impact Lab

Published

April 30, 2026

0.1 Agriculture: Wheat Winter

Flexible damage function parameters at the Impact Region level.

Change in winter wheat yields (log change in yields) under full adaptation

Outcome units: physical

\[D_{it} = (\alpha_i T_t + \beta_i T_t^2) \cdot Y_{it}^{\gamma}\]

where \(\gamma\) is the income elasticity (fitted globally), \(\alpha_i\) is the linear coefficient, and \(\beta_i\) is the quadratic coefficient.


1 Global Estimation

1.1 Income Elasticity Estimation

The income elasticity \(\gamma\) is estimated using a fixed-effects regression:

\[y_{it} = \gamma \cdot \log(Y_{it}) + \mu_{g(i,T)} + \nu_t + \varepsilon_{it}\]

where \(\mu_{g(i,T)}\) are region-by-temperature-bin fixed effects and \(\nu_t\) are year fixed effects.

Table 1: Income Elasticity (Gamma) Estimation Results
Statistic Value
Income elasticity (\(\gamma\)) -0.0182
Standard error 9.75e-04
95% CI [-0.0201, -0.0163]
R-squared 0.9606
Observations 8,227,053
Regions 24,326
Gamma quantiles 19

2 Parameter Distributions

2.1 8-Panel Summary

Row 1: gamma, alpha, beta, rsqr1. Row 2: rho, zeta, eta, rsqr2.

Using median gamma: -0.018165, 24,326 rows (of 462,194 total)
Figure 1: Distribution of Regional Parameters

2.2 Projection Equation and Parameter Definitions

The estimated parameters are used to project damages via Monte Carlo sampling:

\[D_{it}^k = (\hat{\alpha}_{ik} T_t + \hat{\beta}_{ik} T_t^2) Y_{it}^{\hat{\gamma}_k} + \hat{\theta}_{ik} T_t Y_{it}^{\hat{\gamma}_k} + \hat{\phi}_{it}^k\]

where \(k\) indexes the Monte Carlo draw. The parameters in each row of the output CSV control distinct components of this equation:

  • gamma: income elasticity \(\hat{\gamma}_k\), one of 19 quantile values drawn from \(N(\hat{\gamma}, SE(\hat{\gamma}))\)
  • alpha, beta: linear and quadratic temperature coefficients; \(\hat{\alpha}_{ik}\) and \(\hat{\beta}_{ik}\) are drawn from the joint normal defined by the VCV below
  • sigma11, sigma12, sigma22: variance-covariance matrix of \((\alpha, \beta)\), used for joint uncertainty sampling
  • rho: correlation between regional and global polynomial residuals \(\rho_i\), used to maintain spatial covariance across regions in Monte Carlo draws
  • zeta: temperature-dependent error scale \(\zeta_{ik}\); the run-specific error term \(\hat{\theta}_{ik}\) is drawn from \(N(0, \zeta_{ik})\)
  • eta: residual noise standard deviation \(\eta_{ik}\); the annual noise \(\hat{\phi}_{it}^k\) is drawn from \(N(0, \eta_{ik})\)
  • rsqr1, rsqr2: polynomial fit quality and error model fit, respectively

2.3 Summary Statistics

Table 2: Regional Parameter Summary
Parameter Mean Median Std Min Max N
alpha -0.07347 -0.06526 0.133 -0.5277 0.6849 24,326
beta -0.006134 -0.003234 0.008539 -0.09814 0 24,326
rho 0.1425 0.1548 0.1662 -0.5245 0.5907 24,324
zeta 0.01454 0.01294 0.007839 0 0.1038 24,326
eta 0.026 0.02282 0.01531 0 0.1797 24,326
rsqr1 0.7466 0.8984 0.2879 0 0.9949 24,326
rsqr2 0.5712 0.5476 0.09496 0 0.9555 24,326

3 Spaghetti Curves

Regional damage function curves showing D(T) = αT + βT² for sampled regions.

Figure 2: Regional Damage Functions

4 Zero Crossings

The zero crossing (extremum) of the parabola occurs at \(T^* = -\alpha / (2\beta)\).

Table 3: Zero Crossing Statistics
Category Count Percentage
β = 0 (no crossing) 9264 38.1%
T > 20°C (beyond graph) 32 0.1%
T < 0°C (negative crossing) 8619 35.4%
Valid crossings (0-20°C) 6411 26.4%
Figure 3: Distribution of Zero Crossing Temperatures

5 Slope Analysis

Maximum slope between 0 and 10°C: \(\frac{dM}{dT} = \alpha + 2\beta T\)

The maximum occurs at either T=0 or T=10 (endpoints of interval).

Figure 4: Distribution of Maximum Slopes (0-10°C)

Convexity analysis omitted (beta constraint active).


6 R-squared Analysis

6.1 Polynomial Fit Quality (rsqr1)

Figure 5: Regional Fit Quality (R-squared)

6.2 Error Model R-squared (rsqr2) Quantiles

Table 4: rsqr2 Quantiles
0% (Min) 25% 50% (Median) 75% 100% (Max)
0.0000 0.5096 0.5476 0.6107 0.9555

7 Modelled Variance

Modelled variance statistic: \(1 - \frac{\sum_i \eta_i^2}{\sum_i D_i^2}\)

Table 5: Modelled Variance Statistics
Statistic Value
Modelled variance 0.9954
Sum(η²) 22.1450
Sum(D²) at T=3.0°C 4812.4314
N regions 24,326

8 Best- and Worst-Fitting Regions

The 3 worst- and 3 best-fitting regions by R-squared, with raw simulation data overlaid on the fitted polynomial curve. Red rows = worst fits, green rows = best fits.

Table 6: Best- and worst-fitting regions
Top 3 best fit (R²)   Top 3 worst fit (R²)
Region α β η
ARE.1 -0.221 -0.00429 0.0116 0.995
CHN.29.306.2114 0.423 -0.0454 0.0147 0.993
MEX.8.247 -0.201 -0.00213 0.0128 0.991
IND.17.217.761 0.00487 -0.00149 0.0573 0.001
PHL.66.1370 0.00402 -4.78e-4 0.037 0.00131
PHL.66.1385 0.00698 -0.00183 0.0421 0.00159
Figure 6: Fitted polynomial with raw data for worst-fitting regions

9 Regional Parameter Maps

Maps of key parameters at the impact region level. Red = negative (damage increases with T), Blue = positive.

9.1 Alpha (Linear Coefficient)

Alpha (\(\alpha\)) represents the linear sensitivity to temperature. Regions with negative alpha experience damage that increases with the first degree of warming.

Figure 7: α (linear coefficient)

9.2 Beta (Quadratic Coefficient)

Beta (\(\beta\)) represents the curvature of the damage function.

The concavity (\(\beta \leq 0\)) constraint is enforced for this sector, meaning optimal temperature exists, damages accelerate beyond it.

Figure 8: β (quadratic coefficient)

9.3 R-squared (Fit Quality)

\(R^2\) measures the polynomial fit quality. Higher values indicate that the quadratic form captures more of the variance in the data.

Figure 9: R² (stage 1 fit quality)

10 F2: Flex vs Raw Comparison

Comparison of flexible damage function predictions against raw simulation means.

For each scenario (RCP × SSP × Model), we compute at the final year:

  • Flex predicted: \((\alpha \cdot T + \beta \cdot T^2) \cdot Y^\gamma\)
  • Raw actual: The outcome variable (y) from the source data

Year 2098: 97,512 rows

Correlation: 0.9765 | RMSE: 0.048378 | Sign agreement: 91.5%

Top 5 best predicted   Top 5 worst predicted
Year 2098 · Tmean across these regions: 2.05°C
Region Raw Flex Residual
FJI.R13886963f95ae1bc 0 0 0
TUV.R06fb643237e8113e 0 0 0
IND.17.216.755 -0.00886 -0.00886 -1.15e-6
BRA.19.3634.6938 -0.105 -0.105 -1.33e-6
DZA.36.1064 -0.0924 -0.0924 -4.44e-6
COL.26.853 -0.00671 -0.372 -0.365
PER.11.99.Rcccacada0776bd05 0.162 0.442 0.28
TZA.1.2 -0.142 -0.417 -0.275
JAM.6 0.201 -0.0688 -0.27
COL.21.727 -0.143 -0.408 -0.266

Correlation: 0.9793 | RMSE: 0.043087 | Sign agreement: 93.4%

Top 5 best predicted   Top 5 worst predicted
Year 2098 · Tmean across these regions: 2.05°C
Region Raw Flex Residual
FJI.R13886963f95ae1bc 0 0 0
TUV.R06fb643237e8113e 0 0 0
NGA.12.237 0.0238 0.0238 3.46e-6
AUS.11.1339 -0.282 -0.282 -5.50e-6
IND.18.255.983 -0.163 -0.163 -5.92e-6
COL.26.853 -0.0395 -0.375 -0.335
TZA.1.2 -0.723 -0.431 0.292
JAM.6 0.209 -0.068 -0.276
COL.12.447 -0.022 -0.265 -0.243
COL.21.727 -0.179 -0.411 -0.232

Correlation: 0.9901 | RMSE: 0.082952 | Sign agreement: 96.2%

Top 5 best predicted   Top 5 worst predicted
Year 2098 · Tmean across these regions: 4.51°C
Region Raw Flex Residual
FJI.R13886963f95ae1bc 0 0 0
TUV.R06fb643237e8113e 0 0 0
BOL.8.84.286 0.0402 0.0402 5.78e-6
CHL.11.39.238 0.0625 0.0625 8.83e-6
IND.35.585.2272 -0.0641 -0.0641 9.36e-6
ECU.11.103.485 -1.37 -1.82 -0.449
PER.8.78.767 -1 -1.45 -0.448
COL.21.R2796fe48858330ff -1.54 -1.97 -0.434
ECU.18.169.820 -1.12 -1.55 -0.433
COL.10.R2aa1e93b695593d5 -1.42 -1.83 -0.41

Correlation: 0.9900 | RMSE: 0.077473 | Sign agreement: 96.2%

Top 5 best predicted   Top 5 worst predicted
Year 2098 · Tmean across these regions: 4.51°C
Region Raw Flex Residual
FJI.R13886963f95ae1bc 0 0 0
TUV.R06fb643237e8113e 0 0 0
BRA.19.3568.R2fdcdb358dc50a59 -0.365 -0.365 2.68e-5
IND.35.581.2263 -0.0737 -0.0737 3.24e-5
RUS.17.443.443 -0.209 -0.209 -3.76e-5
COL.21.R2796fe48858330ff -1.54 -1.98 -0.444
COL.21.R562e67bd1bbaf7ec -1.45 -1.84 -0.385
TZA.1.2 -1.38 -1 0.38
ECU.11.103.485 -1.46 -1.84 -0.374
COL.10.R2aa1e93b695593d5 -1.47 -1.85 -0.372
Note · countries with no wheat winter data (shown white on every map above; the GCP wheat winter pipeline does not run sims for non-producing countries): ATA, BVT, CL-, HMD, IOT, SGS, SP-.

10.1 Scenario Summary

Table 7: Fit statistics across all 12 scenarios
RCP SSP Model N Corr RMSE Sign%
rcp45 SSP3 high 24,326 0.9765 0.048378 91.5%
rcp45 SSP3 low 24,326 0.9793 0.043087 93.4%
rcp85 SSP3 high 24,326 0.9901 0.082952 96.2%
rcp85 SSP3 low 24,326 0.99 0.077473 96.2%

11 Data Reference

11.1 File Locations

Item Path
Regional CSV /project/cil/gcp/flex_damage_funcs/parameters/agriculture__wheat_winter__regional_parameters.csv
Global JSON /project/cil/gcp/flex_damage_funcs/parameters/agriculture__wheat_winter__global_results.json
Metadata JSON /project/cil/gcp/flex_damage_funcs/parameters/agriculture__wheat_winter__metadata.json

11.2 Column Definitions

Column Description
region Region identifier (hierarchical code, first 3 chars = country ISO3)
gamma Income elasticity quantile value
alpha Linear temperature coefficient
beta Quadratic temperature coefficient
sigma11 Var(alpha)
sigma12 Cov(alpha, beta)
sigma22 Var(beta)
rho Correlation with global residual process
zeta Temperature-dependent heteroskedasticity
eta Residual standard deviation
rsqr1 R-squared of polynomial fit
rsqr2 R-squared of error model

Report generated with FlexDamage v1.0.0