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Economics

Welfare impacts of climate change

Nature Climate Change volume 5, pages 99–100 (2015)Cite this article

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Climate change can affect well-being in poor economies more than previously shown if its effect on economic growth, and not only on current production, is considered. But this result does not necessarily suggest greater mitigation efforts are required.

The impacts of climate change include, but are not limited to, increased heat stress, land loss due to sea level rise, and changes in agricultural productivity with consequences for the welfare of populations across the world. As the major cause of climate change is CO2 emissions, the value of the total welfare impact of the change in climate caused by one extra ton of CO2 emissions can be estimated and is known as the social cost of carbon (SCC). The SCC is of great importance for policymakers, as it provides guidance on how to value the benefits of CO2 reductions. The US government, for instance, provides SCC estimates to allow agencies to incorporate the value of the benefits of reducing CO2 emissions in the evaluation of regulatory actions1. Currently, SCC estimates are based on the assumption that climate change affects economic output — the amount of goods and services produced at present — but not the rate at which an economy grows over time. Although the difference may sound trivial, writing in Nature Climate Change, Frances Moore and Delavane Diaz2 show that considering a direct effect of climate change on economic growth would lead to an estimate of the SCC that could be several times larger than previously thought.

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Figure 1: Failed maize crop after severe drought in East Africa.

NIGEL CATTLIN / ALAMY

References

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Authors and Affiliations

  1. Andries Hof is at PBL Netherlands Environmental Assessment Agency, A. van Leeuwenhoeklaan 9, 3721 MA Bilthoven, the Netherlands,

    Andries F. Hof

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  1. Andries F. Hof
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Correspondence to Andries F. Hof.

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Hof, A. Welfare impacts of climate change. Nature Clim Change 5, 99–100 (2015). https://doi.org/10.1038/nclimate2506

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