A Note on the Economic Cost of Climate Change and the Rationale to Limit it Below 2°C

Dumas, Patrice; Hallegatte, Stephane; Hourcade, Jean-Charles

A Note on the Economic Cost of Climate Change and the Rationale to Limit it Below 2°C

Autores

Dumas, Patrice

Hallegatte, Stephane

Hourcade, Jean-Charles

Editor

World Bank, Washington, DC

Descripción

This note highlights a major reason to limit climate change to the lowest possible levels. This reason follows from the large increase in uncertainty associated with high levels of warming. This uncertainty arises from three sources: the change in climate itself, the change s impacts at the sector level, and their macroeconomic costs. First, the greater the difference between the future climate and the current one, the more difficult it is to predict how local climates will evolve, making it more difficult to anticipate adaptation actions. Second, the adaptive capacity of various economic sectors can already be observed for limited warming, but is largely unknown for larger changes. The larger the change in climate, therefore, the more uncertain is the final impact on economic sectors. Third, economic systems can efficiently cope with sectoral losses, but macroeconomic-level adaptive capacity is difficult to assess, especially when it involves more than marginal economic changes and when structural economic shifts are required. In particular, these shifts are difficult to model and involve thresholds beyond which the total macroeconomic cost would rise rapidly. The existence of such thresholds is supported by past experiences, including economic disruptions caused by natural disasters, observed difficulties funding needed infrastructure, and regional crises due to rapid economic shifts induced by new technologies or globalization. As a consequence, larger warming is associated with higher cost, but also with larger uncertainty about the cost. Because this uncertainty translates into risks and makes it more difficult to implement adaptation strategies, it represents an additional motive to mitigate climate change.

Palabras clave

ADAPTATION ACTIONS, ADAPTATION COSTS, ADAPTATION DECISIONS, ADAPTATION INVESTMENTS, ADAPTATION STRATEGIES, ADAPTATION TO CLIMATE, ADAPTATION TO CLIMATE CHANGE, ADAPTIVE CAPACITY, ADAPTIVE CAPACITY TO CLIMATE CHANGE, AGRICULTURAL ECONOMICS, ALLOCATION, ASSESSING CLIMATE CHANGE, ASSESSMENT OF CLIMATE CHANGE, ASSESSMENT OF CLIMATE CHANGE IMPACTS, CARBON, CATASTROPHIC CLIMATE CHANGE, CLIMATE, CLIMATE CHANGE, CLIMATE CHANGE ADAPTATION, CLIMATE CHANGE CHALLENGE, CLIMATE CHANGE DAMAGES, CLIMATE CHANGE IMPACTS, CLIMATE CHANGE POLICIES, CLIMATE CHANGE PROBLEM, CLIMATE CHANGES, CLIMATE CONDITIONS, CLIMATE DAMAGES, CLIMATE IMPACTS, CLIMATE MODEL, CLIMATE MODELERS, CLIMATE MODELS, CLIMATE POLICIES, CLIMATE PROJECTIONS, CLIMATE REFUGEES, CLIMATE REGIMES, CLIMATE SCENARIOS, CLIMATE SIGNAL, CLIMATE SYSTEM, CLIMATE UNCERTAINTY, CLIMATES, CLIMATIC CHANGE, CLIMATIC CONDITIONS, CLIMATIC SHOCKS, COPE WITH CLIMATE CHANGE, COST OF CLIMATE CHANGE, COST-BENEFIT, COST-BENEFIT ANALYSES, COST-BENEFIT ANALYSIS, COST-BENEFIT ANALYSIS OF CLIMATE CHANGE, COSTS OF CLIMATE CHANGE, COSTBENEFIT ANALYSIS, DAMAGES, DEVELOPMENT ECONOMICS, DISCOUNT RATE, DRAINAGE, DROUGHT, ECOLOGICAL ECONOMICS, ECOLOGICAL SYSTEMS, ECONOMIC COSTS, ECONOMIC DIVERSIFICATION, ECONOMIC IMPACTS, ECONOMIC IMPACTS OF CLIMATE, ECONOMIC IMPACTS OF CLIMATE CHANGE, ECONOMIC MODELS, ECONOMIC SECTORS, ECONOMIC SYSTEMS, ECOSYSTEM, ELASTICITIES, ELASTICITY, EMISSION, EMISSION REDUCTION, EMISSION REDUCTION TARGETS, EMISSIONS, ENERGY INFRASTRUCTURE, EXTREME EVENTS, EXTREME WEATHER, EXTREME WEATHER EVENTS, FINANCIAL RESOURCES, FINANCIAL SUPPORT, FLOOD, FLOOD PROTECTION, FLOOD PROTECTION SYSTEM, FLOOD RISK, FLOODS, GHG, GLOBAL AVERAGE TEMPERATURE, GLOBAL CLIMATE, GLOBAL CLIMATE CHANGE, GLOBAL TEMPERATURE, GLOBAL WARMING, GREENHOUSE, GREENHOUSE GAS, GREENHOUSE GAS CONCENTRATIONS, HEAT, HEAT WAVE, HEAT WAVES, HOT SUMMER, HOT SUMMERS, HURRICANE, HURRICANES, HYDROLOGICAL PROCESSES, ICE, ICE SHEET, IMPACT OF CLIMATE, IMPACT OF CLIMATE CHANGE, IMPACTS OF CLIMATE CHANGE, IMPLEMENT ADAPTATION, INCOME, INFRASTRUCTURE FUNDING, INFRASTRUCTURE INVESTMENT, INFRASTRUCTURES, INSURANCE, INSURANCE COMPANIES, INSURANCE INDUSTRY, INSURANCE SCHEMES, INTEREST RATE, IPCC, LABOR PRODUCTIVITY, LOCAL CLIMATE, LOCAL CLIMATE CHANGES, LOCAL CLIMATES, MALADAPTATION, MITIGATION, MITIGATION POLICIES, NATURAL DISASTER, NATURAL DISASTER RECONSTRUCTION, NATURAL DISASTERS, PH, POWER PLANTS, PP, PRECIPITATION, RAINFALL, RAPID CLIMATE CHANGE, RESOURCE ECONOMICS, RESPONSE TO CLIMATE CHANGE, RETROFITTING, RISK MANAGEMENT, ROADS, SEA LEVEL RISE, SEA-LEVEL, SEA-LEVEL RISE, SUBSTITUTION, SUMMER TEMPERATURE, SUMMER TEMPERATURES, TEMPERATURE, TEMPERATURE INCREASE, TOLL, TOTAL COST, TRANSPORT, TRANSPORT NETWORK, TRANSPORTATION, TRANSPORTATION INFRASTRUCTURE, TRANSPORTATION NETWORKS, TRANSPORTATION SERVICES, UNCERTAINTIES, VEHICLES, WEATHER CONDITIONS, WIND, WINDOW OF OPPORTUNITY