Economic analyses of global climate change have been criticized for their poor representation of climate change damages. Here we develop and apply aggregate damage functions in three economic Integrated Assessment Models (IAMs) with different degrees of complexity. The damage functions encompass a wide but still incomplete set of climate change impacts based on physical impact models. We show that with medium estimates for damage functions, global damages are in the range of 10% to 12% of GDP by 2100 in a baseline scenario with 3 °C temperature change, and about 2% in a well-below 2 °C scenario. These damages are much higher than previous estimates in benefit-cost studies, resulting in optimal temperatures below 2 °C with central estimates of damages and discount rates. Moreover, we find a benefit-cost ratio of 1.5 to 3.9, even without considering damages that could not be accounted for, such as biodiversity losses, health and tipping points.
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All regional damage coefficients for the reduced-form climate change damage functions are available at https://zenodo.org/record/5546264#.YlWeBehBw2w. This includes the sea-level rise, non-sea-level rise and combined damage functions for all used damage quantiles. All scenario data from the three models are available at https://doi.org/10.5281/zenodo.7627679. Source data are provided with this paper.
The calculations and the figures used in this paper and the scripts required to reproduce them are available at https://doi.org/10.5281/zenodo.7627679.
The model code and documentation of the MIMOSA model are available at https://github.com/kvanderwijst/Project-MIMOSA/, of the WITCH model at https://www.witchmodel.org/ and of the REMIND model at https://rse.pik-potsdam.de/doc/remind/2.1.0/ and https://github.com/remindmodel/remind for the model code.
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The research presented in this paper and all authors benefitted from funding under the European Union’s Horizon 2020 Framework Programme for Research and Innovation under Grant Agreement No. 776479 for the project CO-designing the Assessment of Climate Change costs (COACCH, https://www.coacch.eu) and from the European Commission Horizon 2020 Programme H2020/2019–2023 under Grant Agreement No. 821124 (NAVIGATE).
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Extended Data Fig. 1 Calculation of the costs and the benefits (avoided damages) for the Benefit-Cost-Ratio analysis.
First, the direct policy and residual damage costs are scaled to include the indirect costs (remaining difference with a baseline run without damages). The scaled residual damages are subtracted from the total damages from a no-policy run.
Extra figures, description of how the damage functions were created, and more information on the updates of the MIMOSA and the WITCH models.
Source Data Fig. 1
All data points of the damage function subplot.
Source Data Fig. 2
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van der Wijst, KI., Bosello, F., Dasgupta, S. et al. New damage curves and multimodel analysis suggest lower optimal temperature. Nat. Clim. Chang. 13, 434–441 (2023). https://doi.org/10.1038/s41558-023-01636-1
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