For a long time, experts believed that the economic impact of rising temperatures would be relatively minor. However, two economists have now re-evaluated this assumption and reached a different conclusion. Their new paper is causing a stir in the climate science community as it addresses the economic damage caused by unchecked temperature increases.
The paper reveals that the economic damage is much greater than previously thought, estimating that a 1-degree increase in global temperature could reduce global economic growth by up to 12 percent. This long-term impact is compared to the effects of the Great Depression of the 1930s, but with the added complexity of lasting for centuries due to climate change.
One of the authors, Swiss economist Diego Känzig, along with co-author Adrien Bilal from Harvard University, were surprised by their results and spent time validating their model. The paper challenges previous economic models developed by US economist William Nordhaus, which estimated lower economic impacts of temperature increases.
The discrepancy in results arises from the paper’s consideration of global weather patterns and interactions rather than country-specific data used by previous models. This global perspective underscores the potential increase in extreme weather events and their impact on productivity, infrastructure, and capital losses.
In light of their findings, Känzig advocates for increased investment in climate protection measures based on higher economic damage predicted. He believes that further research and discussion are necessary to address this global challenge and its economic consequences.
The authors argue that governments should adopt more ambitious climate policies to mitigate the severe impacts of unchecked temperature increases on their economies.
Despite some criticism of the paper for not accounting for world adaptation to climate change or potential tipping points, Känzig remains convinced that his work will prompt a reevaluation of international climate policies.
Overall, Känzig’s research highlights an urgent need for policymakers to take action against climate change before it’s too late.
The new study raises important questions about how we can balance our economic development with our environmental responsibilities. It also underscores why it’s crucial for governments around the world to work together towards developing effective policies that can help mitigate these risks while promoting sustainable growth.
