Integrated perspective on translating biophysical to economic impacts of climate change

Piontek, Franziska; Drouet, Laurent; Emmerling, Johannes; Kompas, Tom; Méjean, Aurélie; Otto, Christian; Rising, James; Soergel, Bjoern; Taconet, Nicolas; Tavoni, Massimo

doi:10.1038/s41558-021-01065-y

Cited by 57 publications

(40 citation statements)

References 107 publications

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“…42 ). However, integration of this work into economic analyses requires that issues of valuation, equilibrium adjustments and double counting are resolved, which requires an interdisciplinary approach 43 .…”

Section: Missing Biophysical Impactsmentioning

confidence: 99%

“…The spatial and demographic variations in impacts has emerged as one of the central features of economic damages: poor and socioeconomically vulnerable groups in many regions are the most exposed to risks 5,43 . IAMs often represent the world in highly aggregated terms, describing only global results (for example, the DICE model 44 ) or across multi-national regions (for example, PAGE 14 , FUND 45 and RICE 46 ) and for representative agents.…”

Section: Spatial and Temporal Extremesmentioning

confidence: 99%

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The missing risks of climate change

Rising

Tedesco

Piontek

et al. 2022

Nature

117

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Section: Missing Biophysical Impactsmentioning

confidence: 99%

Section: Spatial and Temporal Extremesmentioning

confidence: 99%

The missing risks of climate change

Rising

Tedesco

Piontek

et al. 2022

Nature

117

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“…The question of the persistence of climate damages is a first-order problem for climate change economics. Studies that allow climate change to affect the determinants of economic growth tend to produce far larger aggregate climate change costs than studies that impose only level effects on production [11,[13][14][15]. In response to the permanent shifts in temperature expected with climate change, persistent impacts operate via effects on the growth rate compound over time, producing far larger aggregate damages over the long time frames relevant for assessing climate change costs.…”

Section: Discussionmentioning

confidence: 99%

“…Despite its importance for determining the aggregate costs of climate change, evidence on the persistence of the impacts of temperature shocks is sparse and contradictory [15]. Dell et al [2] show that persistent and non-persistent effects can produce identical contemporaneous effects on the growth rate but can be distinguished using lagged temperature effects.…”

Section: Introductionmentioning

confidence: 99%

Persistent effect of temperature on GDP identified from lower frequency temperature variability

Bastien-Olvera

Granella

Moore

2022

Environ. Res. Lett.

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It is well established that temperature variability affects a range of outcomes relevant to human welfare, including health, emotion and mood, and productivity across a number of economic sectors. However, a critical and still unresolved empirical question is whether temperature variation has a long-lasting effect on economic productivity and, therefore, whether damages compound over time in response to long-lived changes in temperature expected with climate change. Several studies have identified a relationship between temperature and gross domestic product (GDP), but empirical evidence as to the persistence of these effects is still weak. This paper presents a novel approach to isolate the persistent component of temperature effects on output using lower frequency temperature variation. The effects are heterogeneous across countries but collectively, using three different GDP datasets, we find evidence of persistent effects, implying temperature affects the determinants of economic growth, not just economic productivity. This, in turn, means that the aggregate effects of climate change on GDP may be far larger and far more uncertain than currently represented in integrated assessment models used to calculate the social cost of carbon.

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“…This renders the derivation of temperature-dependent damage functions a key pre-requisite for integrated assessments. These functions are usually highly aggregated and lack the ability to resolve climate extremes and their impacts rigorously 35 .…”

Section: Country-level Temperature-dependent Damage Functionsmentioning

confidence: 99%

The Social Cost of Tropical Cyclones

Otto

Krichene

Vogt

et al. 2022

Preprint

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The intensification of extreme weather events under global warming [1] requires the development of tailored evidence-based adaptation and mitigation strategies [2] to reduce the loss and damage caused by these events\cite [3]. Recently, first empirical evidence emerged that extreme weather events can have adverse impacts on economic development for more than a decade [4-7]. The neglect of these long-term effects in state-of-the-art integrated assessment exercises weighing the costs of climate change impacts against the costs of adaptation and mitigation measures may result in a critical lack of ambition in climate action [8]. We here estimate total and country-specific climate change-induced discounted annual damage (DAD) from tropical cyclones (TCs) for a large set of 41 TC-prone countries under different climate and socioeconomic futures. Accounting for the persisting impacts of TCs on the economy, these estimates reveal future adaptation needs of the countries. We then derive temperature-dependent TC damage function for a large set of 41 TC-affected countries that account for persistent growth effects. These functions allow us, for the first time, to quantify the country-level social cost of carbon (SCC) induced by TCs as a key metric to inform mitigation decisions. We find that for a middle-of-the-road scenario regarding greenhouse gas emissions, population development and economic growth, the additional average per-capita DAD corresponds to about one day of annual income lost for the average household in strongly affected high-income countries such as Hong Kong, Taiwan, Japan, the United States but also in TC-prone developing countries as for instance the Philippines or Vietnam. Further, accounting for TC impacts significantly increases the SCC of strongly affected major greenhouse gas emitters such as Japan (+39.8%), China (+8.1%), or the US (+6.3%) as well as globally by +2.1% (+5.4% in TC-affected countries). Our results underline the importance - and pave the way - to adequately account for the impacts of extreme weather events in integrated assessment of remaining climate damages along mitigation and adaptation pathways.

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Integrated perspective on translating biophysical to economic impacts of climate change

Cited by 57 publications

References 107 publications

The missing risks of climate change

The missing risks of climate change

Persistent effect of temperature on GDP identified from lower frequency temperature variability

The Social Cost of Tropical Cyclones

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