Current Economic Models Underestimate Climate Change

Flawed climate economic modeling is underestimating the damage that climate change is causing to the planet, as well as the economy. Scientists generally agree that climate change is a major threat, but economists are not as quick to agree. Current economic models tend to underestimate both the potential impacts of dangerous climate change and the benefits of transitioning to low-carbon growth. There is an urgent need for a new generation of models that give a more accurate picture.

The Institute for Policy Integrity at NYU published a report summarizing a survey of economists with climate expertise. The key finding was there’s a strong consensus among climate economics experts that we should put a price on carbon pollution to curb the expensive costs of climate change.

When accounting for the vulnerability of poorer countries to climate impacts, global warming has been hurting the global economy since about 1980. When asked at what date climate change will have a net negative impact on the global economy, the median response was 2025. In the recent past, climate change likely had a net positive impact on the global economy, due primarily to the effect of carbon fertilization on crops and other plant life.

Economists are worried that if we fail to cut carbon pollution and instead continue with business-as-usual, it will badly stunt economic growth and may potentially lead to catastrophic economic consequences. Climate change is hurting the global economy and we should mitigate those costs by cutting carbon pollution. The most efficient way to do that is with a market-based system like a carbon tax or cap and trade system.

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