1. A new paper for the National Bureau of Economic Research suggests that the global economic cost of climate change could be six times higher than previous estimates.
2. Every one degree of atmospheric warming reduces global GDP by 12%, according to the paper by economists Diego Känzig and Adrien Bilal.
3. The paper places the social cost of carbon at over $1,000/tCO2, leading to a Domestic Cost of Carbon of $211/tCO2, making decarbonisation efforts more financially justifiable for individual countries.
A new paper for the National Bureau of Economic Research suggests that the global economic cost of climate change could be six times higher than previously estimated. The paper calculates that every one degree of atmospheric warming reduces global GDP by 12%, using global heating data cross-referenced with national GDPs. The social cost of carbon (SCC) is estimated at over $1,000/tCO2, significantly higher than previous calculations. This high SCC could justify unilateral decarbonisation efforts in countries like the US.
The study has sparked controversy with critics questioning its methodology, including members of the market-focused environmental research centre The Breakthrough Institute. Despite this, the findings highlight the significant threat posed by climate change to global economies. The paper also introduces the concept of the Domestic Cost of Carbon (DCC), which could justify decarbonisation efforts at higher costs per tonne of CO2.
Industry response varies, with one expert suggesting that countries may adjust their carbon pricing based on the findings. The paper’s methodology and findings have challenged previous research, but further studies are needed to establish a consensus view. Overall, the study underscores the urgency of addressing climate change and the economic implications of inaction.