[Verse 1]
Primate change
The social cost of carbon
Come on,
Estrange
[Chorus]
An increase in decline
Happening all the time
In fact, the impact
Wails a whack
[Instrumental, Guitar Solo, Drum Fills]
[Verse 2]
Primate change
Costs an arm and a leg
Feels strange
Literally, I beg
[Chorus]
An increase in decline
Happening all the time
In fact, the impact
Wails a whack
[Instrumental, Saxophone Solo, Piano]
[Bridge]
Macroeconomic impact
The poor poorly lack
Damn damages
Upset averages
Extreme events
Prevents
[Chorus]
An increase in decline
Happening all the time
In fact, the impact
Wails a whack
[Instrumental, Guitar Solo, Bass]
[Outro]
Macroeconomic impact
The poor poorly lack
Damn damages
Upset averages
[End]
A SCIENCE NOTE
The Macroeconomic Impact of Climate Change: Global vs. Local Temperature
This paper estimates that the macroeconomic damages from climate change are six times larger than previously thought. We exploit natural variability in global temperature and rely on time-series variation. A 1°C increase in global temperature leads to a 12% decline in world GDP. Global temperature shocks correlate much more strongly with extreme climatic events than the country-level temperature shocks commonly used in the panel literature, explaining why our estimate is substantially larger. We use our reduced-form evidence to estimate structural damage functions in a standard neoclassical growth model. Our results imply a Social Cost of Carbon of $1,056 per ton of carbon dioxide. A business-as-usual warming scenario leads to a present value welfare loss of 31%. Both are multiple orders of magnitude above previous estimates and imply that unilateral decarbonization policy is cost-effective for large countries such as the United States.
The economic damage caused by climate change is six times worse than previously estimated, with global warming set to reduce wealth at a rate comparable to the financial losses of a continuous, permanent war, according to recent research.
The study found that a 1°C increase in global temperature leads to a 12% decline in world gross domestic product (GDP), a far higher estimate than previous analyses. The world has already warmed by more than 1°C (1.8°F) since pre-industrial times, and many climate scientists predict a 3°C (5.4°F) rise will occur by the end of this century due to the ongoing burning of fossil fuels. This scenario, according to a new working paper that has yet to be peer-reviewed, will result in an enormous economic cost.
A 3°C temperature increase will cause “precipitous declines in output, capital, and consumption that exceed 50% by 2100,” the paper states. This economic loss is so severe that it is “comparable to the economic damage caused by fighting a war domestically and permanently,” it adds.