A recent report states that the results of economic models that undervalue the possible risks of the effects of climate change are misleading policymakers.
The paper, published in the Review of Environmental Economics and Policy, urges the Intergovernmental Panel on Climate Change (IPCC) to enhance the way it studies the results of economic modeling when it prepares its Sixth Assessment Report, which is due to be published in 2021 and 2022.
The authors of the paper, Thomas Stoerk of the Environmental Defense Fund, Gernot Wagner of the Harvard University Center for the Environment, and Bob Ward of the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science, emphasize the need to focus on “mounting evidence that current economic models of the aggregate global impacts of climate change are inadequate in their treatment of uncertainty and grossly underestimate potential future risks.”
They have warned that the “integrated assessment models” used by economists “largely ignore the potential for ‘tipping points’ beyond which impacts accelerate, become unstoppable, or become irreversible.”
Consequently, “they inadequately account for the potential damages from climate change, especially at moderate to high levels of warming,” due to increases in global mean temperature of over 2 °C.
The authors highlight “a major discrepancy between scientific and economic estimates of the impacts of unmanaged future climate change.”
These discrepancies between the physical and the economic impact estimates are large, and they matter. However, physical impacts are often not translated into monetary terms and they have largely been ignored by climate economists.”
According to the paper, the IPCC Sixth Assessment Report should “strengthen its focus on decision making under uncertainty” and “focus on estimating how the uncertainty itself affects economic and financial cost estimates of climate change.”
The authors specify that the preparation of the report “can act as a broad forum that brings together scientists and economists with a goal of quantifying the impacts of climate change.”
They propose that this would enable the IPCC to “provide policymakers with a more robust and rigorous way of assessing the potential future risks of economic damage from climate change.”
The authors have written to Professor Hans-Otto Pörtner and Professor Debra Roberts, the Co-Chairs of IPCC Working Group II, to stress the importance of the new paper.