Economic impacts of tipping points in the climate system

Simon Dietz (), James Rising, Thomas Stoerk and Gernot Wagner
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Simon Dietz: Department of Geography and Environment, London School of Economics and Political Science, London WC2A 2AE, United Kingdom; Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, London WC2A 2AE, United Kingdom
James Rising: College of Earth, Ocean and Environment, University of Delaware, Newark, DE 19716
Thomas Stoerk: Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, London WC2A 2AE, United Kingdom
Gernot Wagner: Department of Environmental Studies and Robert F. Wagner Graduate School of Public Service, New York University, New York, NY 10003

Proceedings of the National Academy of Sciences, 2021, vol. 118, issue 34, e2103081118

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.

Keywords: COVID-19; climate tipping points; social cost of carbon; integrated assessment model; climate risk (search for similar items in EconPapers)
Date: 2021
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