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Economic impacts of a glacial period: a thought experiment to assess the disconnect between econometrics and climate sciences

Marie-Noëlle Woillez (), Gaël Giraud () and Antoine Godin ()
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Marie-Noëlle Woillez: IFREMER - Institut Français de Recherche pour l'Exploitation de la Mer, AFD - Agence française de développement
Gaël Giraud: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, GU - Georgetown University [Washington], Chaire Energie & Prospérité - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Institut Louis Bachelier

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Abstract: Anthropogenic climate change raises growing concerns about its potential catastrophic impacts on both ecosystems and human societies. Yet, several studies on damage induced on the economy by unmitigated global warming have proposed a much less worrying picture of the future, with only a few points of decrease in the world gross domestic product (GDP) per capita by the end of the century, even for a global warming above 4 ∘C. We consider two different empirically estimated functions linking GDP growth or GDP level to temperature at the country level and apply them to a global cooling of 4 ∘C in 2100, corresponding to a return to glacial conditions. We show that the alleged impact on global average GDP per capita runs from −1.8 %, if temperature impacts GDP level, to +36 %, if the impact is rather on GDP growth. These results are then compared to the hypothetical environmental conditions faced by humanity, taking the Last Glacial Maximum as a reference. The modeled impacts on the world GDP appear strongly underestimated given the magnitude of climate and ecological changes recorded for that period. After discussing the weaknesses of the aggregated statistical approach to estimate economic damage, we conclude that, if these functions cannot reasonably be trusted for such a large cooling, they should not be considered to provide relevant information on potential damage in the case of a warming of similar magnitude, as projected in the case of unabated greenhouse gas emissions.

Date: 2020-12
New Economics Papers: this item is included in nep-cwa and nep-env
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Published in Earth System Dynamics, European Geosciences Union, 2020, 11 (4), pp.1073-1087. ⟨10.5194/esd-11-1073-2020⟩

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Working Paper: Economic impacts of a glacial period: a thought experiment to assess the disconnect between econometrics and climate sciences (2020) Downloads
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DOI: 10.5194/esd-11-1073-2020

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