Economic impacts of tipping points in the climate system

Simon Dietz,James Rising,Thomas Stoerk,Gernot Wagner

doi:10.1073/pnas.2103081118

Abstract

Climate scientists have long emphasized the importance of climate tipping points like thawing permafrost, ice sheet disintegration, and changes in atmospheric circulation. Yet, save for a few fragmented studies, climate economics has either ignored them or represented them in highly stylized ways. We provide unified estimates of the economic impacts of all eight climate tipping points covered in the economic literature so far using a meta-analytic integrated assessment model (IAM) with a modular structure. The model includes national-level climate damages from rising temperatures and sea levels for 180 countries, calibrated on detailed econometric evidence and simulation modeling. Collectively, climate tipping points increase the social cost of carbon (SCC) by ∼25% in our main specification. The distribution is positively skewed, however. We estimate an ∼10% chance of climate tipping points more than doubling the SCC. Accordingly, climate tipping points increase global economic risk. A spatial analysis shows that they increase economic losses almost everywhere. The tipping points with the largest effects are dissociation of ocean methane hydrates and thawing permafrost. Most of our numbers are probable underestimates, given that some tipping points, tipping point interactions, and impact channels have not been covered in the literature so far; however, our method of structural meta-analysis means that future modeling of climate tipping points can be integrated with relative ease, and we present a reduced-form tipping points damage function that could be incorporated in other IAMs.

Highlights

Climate scientists have long emphasized the importance of climate tipping points like thawing permafrost, ice sheet disintegration, and changes in atmospheric circulation
We have synthesized an emerging but fragmented literature modeling the economic impacts of climate tipping points
Our aim has been to develop a more quantitative, structured understanding of the whole issue, so that climate tipping points are better reflected in the policy advice economists give on climate change [33]

Summary

Introduction

Climate scientists have long emphasized the importance of climate tipping points like thawing permafrost, ice sheet disintegration, and changes in atmospheric circulation. We reviewed this literature and identified 52 papers that model the economic consequences of at least one climate tipping point (SI Appendix, Table S1) Many of these studies, represent climate tipping points in a highly stylized way. Examples include an instantaneous jump in the model’s equilibrium climate sensitivity [11], an arbitrary reduction in global gross domestic product (GDP) [12], and a one-off permanent reduction in global utility [13] While such studies have helped put climate tipping points on the economic research agenda and contributed to understanding qualitative aspects of climate policy in the face of tipping points, such stylized representations are unrealistic from a geophysical point of view and difficult to calibrate quantitatively. There are many interactions between tipping points [14], and there is no simple way to capture those interactions using basic methods of literature synthesis

Methods

Results

Discussion

Conclusion