Quantifying Economic Damages from Climate Change

BACKGROUND:

Climate change is acknowledged as a global phenomenon, with local emissions causing damages across the globe and over extended periods. This makes the quantification of the "social cost of carbon" complex but crucial for effective policy-making. The study addresses the inconsistent focus on modeling the physical impacts of climate change relative to understanding its economic consequences.

GOALS AND METHODS:

The author aims to review how economists calculate the social cost of carbon, examine the challenges in parameterizing damage functions that relate climate impacts to economic outcomes, and suggest improvements to make these estimates more comprehensive and actionable. The study uses a review and synthesis approach to evaluate the methodologies employed in estimating the social cost of carbon and the economic damages of climate change. It examines Integrated Assessment Models which integrate socioeconomic scenarios, climate projections, and economic damage functions to estimate the social cost of carbon.

CONCLUSIONS AND TAKEAWAYS:

The study concludes that estimating the economic damages of climate change and the costs of carbon emissions is vital but has complexities, including uncertainties, catastrophic risks, and adaptation challenges. It emphasizes the need to improve models by incorporating updated data, better methodologies, and broader coverage of sectors and regions.