Abstract
Abstract. Both climate-change damages and climate-change mitigation will incur economic costs. While the risk of severe damages increases with the level of global warming (Dell et al., 2014; IPCC, 2014b, 2018; Lenton et al., 2008), mitigating costs increase steeply with more stringent warming limits (IPCC, 2014a; Luderer et al., 2013; Rogelj et al., 2015). Here, we show that the global warming limit that minimizes this century's total economic costs of climate change lies between 1.9 and 2 ∘C, if temperature changes continue to impact national economic growth rates as observed in the past and if instantaneous growth effects are neither compensated nor amplified by additional growth effects in the following years. The result is robust across a wide range of normative assumptions on the valuation of future welfare and inequality aversion. We combine estimates of climate-change impacts on economic growth for 186 countries (applying an empirical damage function from Burke et al., 2015) with mitigation costs derived from a state-of-the-art energy–economy–climate model with a wide range of highly resolved mitigation options (Kriegler et al., 2017; Luderer et al., 2013, 2015). Our purely economic assessment, even though it omits non-market damages, provides support for the international Paris Agreement on climate change. The political goal of limiting global warming to “well below 2 degrees” is thus also an economically optimal goal given above assumptions on adaptation and damage persistence.
Highlights
We focus on the direct impacts of global warming on economic output
Cost–benefit integrated-assessment models (IAMs) such as Climate Framework for Uncertainty, Negotiation and Distribution (FUND), Policy Analysis of the Greenhouse Effect (PAGE), and Dynamic Integrated Climate-Economy model (DICE) (Anthoff and Tol, 2014; Hope, 2013; Nordhaus, 2014, 2010) typically combine a stylized representation of mitigation strategies with “damage functions”, which aggregate the economic costs from climate impacts as a function of the global warming
We complement existing estimates by combining country-specific empirical damage estimates with mitigation cost estimates from a more detailed integrated assessment based on the energy–economy–climate model Regional Model of Investments and Development (REMIND) (Kriegler et al, 2017; Luderer et al, 2013, 2015)
Summary
We focus on the direct impacts of global warming (damages and mitigation) on economic output (gross domestic product; GDP). ∼ 50 energy conversion technologies, as well as a sectoral representation of non-CO2 greenhouse gas emissions), in contrast to exogenous abatement cost functions in cost–benefit integrated-assessment models depicting mitigation strategies in a more stylized manner In their pioneering work, Burke et al (2015) derive an empirical relation of annual historical temperature deviations and GDP changes based on country-specific data for 50 years (1960–2010) and 166 countries (which we apply for 186 countries). For more details on the calculation of damage costs, see Appendix A2
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