The Macroeconomic Impact of Climate Change: Global vs. Local Temperature

Adrien Bilal and Känzig, Diego
Authors registered in the RePEc Author Service: Diego Raoul Känzig

No 19203, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper estimates that the macroeconomic damages from climate change are an order of magnitude larger than previously thought. Exploiting natural global temperature variability, we find that 1°C warming reduces world GDP by over 20% in the long run. Global temperature correlates strongly with extreme climatic events, un- like country-level temperature used in previous work, explaining our larger estimate. We use this evidence to estimate damage functions in a neoclassical growth model. Business-as-usual warming implies a present welfare loss of more than 30%, and a Social Cost of Carbon in excess of $1,500 per ton. These impacts suggest that uni- lateral decarbonization policy is cost-effective for large countries such as the United States.

Keywords: Climate change; Macroeconomics (search for similar items in EconPapers)
JEL-codes: E01 E23 F18 O44 Q54 Q56 (search for similar items in EconPapers)
Date: 2024-07
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Working Paper: The Macroeconomic Impact of Climate Change: Global vs. Local Temperature (2024)
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