Nature Loss and Climate Change: The Twin-Crises Multiplier

Stefano Giglio, Theresa Kuchler, Johannes Stroebel and Olivier Wang

No 33361, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the economic effects of the interaction of nature loss and climate change in a model that incorporates important aspects of both processes. We capture the distinct ways in which they affect economic activity—with nature constituting a key factor of production and climate change destroying parts of output—but also the ways in which they interact: climate change causes nature loss, and nature provides both a carbon sink and adaptation tools to reduce climate damages. Our analysis of these feedback loops reveals a novel amplification channel—the Twin-Crises Multiplier—that systematically affects optimal climate and nature conservation policies.

JEL-codes: G0 Q2 Q20 Q3 Q38 Q5 Q50 (search for similar items in EconPapers)
Date: 2025-01
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Working Paper: Nature Loss and Climate Change: The Twin-Crises Multiplier (2025)
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