The possibility and plausibility of large macroeconomic impacts from climate change

Abstract

Does climate change represent a serious or even catastrophic threat to future lives and livelihoods, or is it more likely to be a relatively modest annoyance that most of the world will be able to straightforwardly deal with? Proponents of both views are commonly found in both academic literature and broader popular and policy debates. Surveys of academic experts have found very wide variation in expectations of potential economic damage from future climate change, with some expecting negligible economic impacts and others foreseeing substantial possible declines in future economic output from a warming climate. Early economic analysis using integrated assessment models suggested that climate change might reduce economic output by only a few percentage points by 21002—or roughly one to two years of economic growth, hardly an economic catastrophe.