1 Integrating micro and macro economic valuation approaches in assessing welfare changes caused by climate change impacts on ecoystem services Helen Ding, Paulo A.L.D. Nunes, Francesco Bosello and Ramiro Parrado - Paper prepared for the EXIOPOL Summer School) - (DRAFT, PLEASE DO NOT QUOTE) ABSTRACT This paper contributes to the ongoing debate by addressing the economic valuation of the induced climate change impacts on European biodiversity and ecosystem services. Firstly, we evaluate the impacts of climate change on biodiversity and ecosystem services, building upon the Millennium Ecosystem Assessment (MA) conceptual framework, and encompasses the determination of the role of biodiversity in the creation of provisioning, regulating and cultural services. Secondly, we develop an integrated, hybrid valuation approach to assess the economic magnitude of the involved impacts. Finally, we extend state-of-the-art general equilibrium model by introducing a new ‘ecosystem’ sector into the underlying “market-based” general equilibrium assessment. The estimation results show that induced climate change impacts on biodiversity and ecosystem services involve significant welfare losses, of about 145-170 billion US$ and therefore autonomous adaptation cannot be invoked as the solution to climate change. Furthermore, the distribution of the impacts varies widely according to the nature of the ecosystem service under consideration and to the geo-climatic region. Thus, the decision of including biodiversity and ecosystem services is expected to be a key component of the future climate policy framework, along with the evaluation of exisiting mitigation and planned adaptation strategies. Keywords: biodiversity and ecosystem services, climate change, Partial-General Equilibrium model JEL: Q57