Evaluating the Spatial Consequences of a Climate Tipping Point

José-Luis Cruz (), Klaus Desmet () and Esteban Rossi-Hansberg
Additional contact information
José-Luis Cruz: Federal Reserve Bank of New York
Klaus Desmet: Department of Economics and Cox School of Business, Southern Methodist University, Federal Reserve Bank of Dallas, NBER and CEPR

No 2026-122, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: The Atlantic Meridional Overturning Circulation (AMOC) is a system of ocean currents that plays a key role in regulating global climate, including moderating temperatures in Europe and the North Atlantic. Its potential collapse due to global warming is widely considered one of the more likely climate tipping points. This paper examines the economic implications of such a collapse using a dynamic spatially integrated assessment model (S-IAM) of the world economy. Scandinavia and parts of Russia are predicted to experience significant losses in GDP and welfare, while southern Europe, northern Africa, and Brazil benefit from slightly colder temperatures. S-IAMs generally predict that global warming is especially harmful to low-income regions, but an AMOC collapse could mitigate some of these negative impacts in parts of the developing world while instead harming some of the more advanced economies. This lowers spatial inequality, but global welfare drops by 1.9% by 2200 under an intermediate-emissions scenario.

Keywords: climate tipping points; AMOC; spatially integrated assessment models; geography; development (search for similar items in EconPapers)
JEL-codes: F18 F64 O11 Q54 Q56 R11 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2026
New Economics Papers: this item is included in nep-cis and nep-res
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https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_2026-122.pdf (application/pdf)

Related works:
Working Paper: Evaluating the Spatial Consequences of a Climate Tipping Point (2026)
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Persistent link: https://EconPapers.repec.org/RePEc:bfi:wpaper:2026-122

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