Assessing the Impacts of Climate Change

Abstract

JT03262668Climate change is expected to have significant implications for the world economy and, more broadly, for many areas of human activity. The purpose of this review is twofold. First, it is to summarise current estimates of the impacts of climate change and to explain how these estimates are built in order to identify the main sources of uncertainty and approximation affecting them. Second, the paper discusses how this uncertainty should influence policymaker"s decisions. A main conclusion of the review is that there are large uncertainties, which are not fully reflected in existing estimates of global impacts of climate change in monetary units. Nonetheless, despite these uncertainties, policy action may be justified, provided that policies are cost-effective, even if the marginal cost of GHG emissions mitigation exceeds the marginal damage of one additional ton of carbon. This is because two features of the impacts of climate change tilt the balance in favour of action: their irreversibility, and the risk that they are extreme.JEL classification: Q00; Q54. Keywords: climate change; impact; uncertainty; irreversibility; extreme events. ++++++++++++++++ Évaluer les impacts du changement climatique : une revue de la littératureLe changement climatique devrait avoir des conséquences importantes sur l"économie mondiale et, plus généralement, sur un large éventail d"activités humaines. L"objectif de cette revue est double. D"une part, il s"agit de résumer les estimations récentes des impacts du changement climatique et d"expliquer comment ces estimations sont obtenues afin d"identifier les principales sources d"incertitude et d"approximation qui les entourent. D"autre part, la façon dont cette incertitude devrait influencer les décisions des responsables politiques est discutée. L"une des conclusions principales de cette revue est qu"il existe un grand nombre d"incertitudes autour des impacts du changement climatique qui ne sont pas pleinement reflétées dans les estimations des impacts globaux exprimés en unité monétaire. Néanmoins, en dépit de ces incertitudes, une politique active pourrait être justifiée, à condition que ces politiques soient efficaces au regard des coûts, même si le coût marginal de réduction des émissions des gaz à effet de serres est supérieur au coût marginal d"une tonne additionnelle de carbone. Ce résultat provient de deux caractéristiques des impacts qui inclinent la balance en faveur de l"action : leur irréversibilité et le risque qu"ils soient extrêmes.

OECD Environmental Outlook to 2050

“…The optimal means and timing of interventions remains unknown and there is a difficult trade-off between avoiding irreversible policy cost and avoiding irreversible, and possibly extreme, damages. However, policies can influence this trade-off (Jamet and Corfee-Morlot, 2009;Weitzman, 2009).…”

Towards a Green Investment Policy Framework

“…Scientific uncertainty and the tendency toward "short-termism" should not be allowed to delay timely mitigation goal setting or to hinder an adaptation strategy to address the inevitable risks to people and infrastructure due to unavoidable climate change. The risk of irreversible, possibly catastrophic damage from climate change justifies action through the use of cost-effective policies, even if the marginal costs exceed the marginal benefits today (Jamet and Corfee-Morlot, 2009;Weitzman, 2011).…”

Economics of Open-Source Solar Photovoltaic Powered Cryptocurrency Mining

“…17 -19 Pollution from fossil-fuel generated electricity is destabilizing the global climate, causing severe impacts of climate change. 20 This in turn creates threats to the food supply, with 1/3 of global food production being forced outside of a safe climate space, 21 massive human health risks, increased mortality risks, 22 and economic threats to the global economy. 23 This environmental destruction has been a prevailing theme in the media regarding cryptocurrency, which has hindered its acceptance among the public, institutions, and green investors.…”