displacement of people and increased risk of violent conflict; and species extinction and biodiversity loss. Although these impacts vary by region, and some impacts are not well-understood, evidence of these impacts has grown in recent years.[1]
A new class of empirical studies draw similar conclusions. Dell, Jones, and Olken (2013) review academic research that draws on historical variation in weather patterns to infer the effects of climate change on productivity, health, crime, political instability, and other social and economic outcomes. This approach complements physical science research by estimating the economic impacts of historical weather events that can be used to extrapolate to those expected in the future climate. The research finds evidence of economically meaningful impacts of climate change on a variety of outcomes. For example, when the temperature is greater than 100° Fahrenheit in the United States, labor supply in outdoor industries declines up to one hour per day relative to temperatures in the 76°-80° Fahrenheit range (Graff Zivin and Neidell 2014). Also in the United States, each additional day of extreme heat (exceeding 90° Fahrenheit) relative to a moderate day (50° to 59° Fahrenheit) increases the annual age-adjusted mortality rate by roughly 0.11 percent (Deschênes and Greenstone 2011).
These studies provide insights into the response of specific sectors or aspects of the economy to climate change. But because they focus on specific aspects of climate change, use different data sources, and use a variety of outcome measures, they do not provide direct estimates of the aggregate, or total, cost of climate change. Because estimating the total cost of climate change requires specifying future baseline economic and population trajectories, efforts to estimate the total cost of climate change typically rely on integrated assessment models (IAMs). IAMs are a class of economic and climate models that incorporate both climate and economic dynamics so that the climate responds to anthropogenic emissions and economic activity responds to the climate. In addition to projecting future climate variables and other economic variables, the IAMs estimate the total economic damages (and, in some cases, benefits) of climate change which includes impacts on agriculture, health, ecosystems services, productivity, heating and cooling demand, sea level rise, and adaptation.
Overall costs of climate change are substantial, according to IAMs. Nordhaus (2013) estimates global costs that increase with the rise in global average temperature, and Tol (2009, 2014) surveys various estimates. Two themes are common among these damage estimates. First, damage estimates remain uncertain, especially for large temperature increases. Second, the costs of climate change increase nonlinearly with the temperature change. Based on Nordhaus’s (2013, Figure 22) net damage estimates, a 3° Celsius temperature increase above preindustrial levels, instead of 2°, results in additional damages of 0.9 percent of global output.[2] To put this
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- ↑ The EPA’s Climate Change Impacts and Risk Analysis project collects new research that estimates the potential damages of inaction and the benefits of GHG mitigation at national and regional scales for many important sectors, including human health, infrastructure, water resources, electricity demand and supply, ecosystems, agriculture, and forestry (Waldhoff et al. 2014).
- ↑ Some studies estimate that small temperature increases have a net economic benefit, for instance due to increased agricultural production in regions with colder climates. However, projected temperature increases even under immediate action fall in a range with a strong consensus that the costs of climate change exceed such benefits. The cost estimates presented here are net of any benefits expected to accrue.
