The economics of climate change

In a new study, an international team of scientists, led by the Potsdam Institute and co-authored by Professor Mark Freeman from the University of York School for Business and Society, has found that limiting global warming to below two degrees does in fact strike an economically optimal balance between future climate damages and the cost of taking action on the climate today.

The two-degree target was set in 2018 following recommendations in a report published by the Intergovernmental Panel on Climate Change (IPCC) commissioned by the UN. On the same day, William Nordhaus was awarded the Nobel Prize in Economics for his Dynamic Integrated Climate-Economy (DICE) model, which found 3.5 degrees of warming by 2100 would be the economically optimal outcome.

The authors of the new study updated the DICE model with the latest data and insights from both climate science and economics and bridges the gulf between experts over what level of climate action is best, economically speaking. Mark Freeman said: “Achieving consensus on this issue is so important because life on earth with 3.5 degrees of warming is likely to be fundamentally different to life with two degrees or 1.5 degrees of warming."

Full story here.