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Integrated perspective on translating biophysical to economic impacts of climate change

Abstract

Estimates of climate change’s economic impacts vary widely, depending on the applied methodology. This uncertainty is a barrier for policymakers seeking to quantify the benefits of mitigation. In this Perspective, we provide a comprehensive overview and categorization of the pathways and methods translating biophysical impacts into economic damages. We highlight the open question of the persistence of impacts as well as key methodological gaps, in particular the effect of including inequality and adaptation in the assessments. We discuss the need for intensifying interdisciplinary research, focusing on the uncertainty of econometric estimates of damages as well as identification of the most socioeconomically relevant types of impact. A structured model intercomparison related to economic impacts is noted as a crucial next step.

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Fig. 1: Taxonomy of approaches to capture economic impacts of climate change.
Fig. 2: Global GDP losses at increasing warming levels, estimated with different modelling approaches.
Fig. 3: Level and growth effects.
Fig. 4: Climate impacts between countries.

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Acknowledgements

We thank D. Diaz for providing the data for the implied damage functions for the FUND and PAGE models as shown in the final column of Table 1. We also thank the participants of the workshop ‘Integrating impacts, mitigation and inequality—state of the art and road ahead’, held in 2019 at the Potsdam Institute for Climate Impact Research, for input and discussions, as well as F. Moore for comments. The authors acknowledge the funding provided by the NAVIGATE project (H2020/2019-2023, grant agreement number 821124) of the European Commission. F.P. acknowledges funding through the ENGAGE project, funded through the Leibniz Competition (SAW-2016-PIK-1), and the CHIPS project, part of AXIS, an ERA-NET initiated by JPI Climate, funded by FORMAS (Sweden), DLR/BMBF (Germany, grant no. 01LS1904A), AEI (Spain) and ANR (France) with co-funding by the European Union (grant no. 776608).

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F.P., J.R., J.E., T.K., N.T., A.M. and B.S. developed the synopsis. F.P., J.R., J.E., T.K., N.T., A.M., B.S. and L.D. wrote the manuscript with contributions by C.O. and M.T. The figures were developed by F.P., J.R., T.K., J.E. and N.T. All authors contributed to the literature review. Supplementary Table 1 was developed by N.T. with contributions by all authors.

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Correspondence to Franziska Piontek.

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Peer review informationNature Climate Change thanks Gilbert Metcalf, Franziska Schünemann, Richard Tol and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.

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Piontek, F., Drouet, L., Emmerling, J. et al. Integrated perspective on translating biophysical to economic impacts of climate change. Nat. Clim. Chang. 11, 563–572 (2021). https://doi.org/10.1038/s41558-021-01065-y

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