Strong economic case for climate action and limiting warming to below 2 degrees

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The IPCC released the final part of its Sixth Assessment Report on March 20, urging that only swift and drastic action against climate change can avert irreversible damage to the world. A new study published in Nature Climate Change has found that limiting climate change is also more beneficial for the economy. "Keeping climate change below 2C will cost governments far less than dealing with the damages associated with further temperature increases," says lead author Kaj-Ivar van der Wijst.

Previous economic analyses of the impacts of climate change have been criticized for not accurately representing the damages caused by global warming. The new study translates for the first time the global damages from climate change such as sea level rise, floods and droughts to economic damages using state-of-the-art specialized Integrated Assessment Models from teams all over Europe. It then calculates how these damage compares to the costs of reducing emissions.

Strong economic case for reducing carbon emissions

The study shows that with a 3C rise in temperature, global damages caused by climate change could range from 10% to 12% of GDP by 2100. However, when temperatures are kept below 2C, damages are estimated to be around 2% of GDP. "Previous benefit-cost studies had underestimated the costs of damages for temperature rises beyond 2C. Our study gives strong economic validation of the need to reduce carbon emissions and support the efforts of the Paris Agreement," says van der Wijst, an assistant professor at Utrecht University’s Copernicus Institute of Sustainable Development.

The actual damages caused by temperature rises beyond 2C may be underestimated, since the model did not account for all impacts like biodiversity loss, health consequences, and crossed tipping points. "This indicates that the benefits of limiting global warming to below 2C significantly outweigh the costs by a factor of 1.5 to 3.9, and that the target temperature should be set at well below 2C," says van der Wijst.

Climate impacts unequally distributed

In line with previous studies, the research shows the economic cost of climate change will be unequally distributed, with the Global South bearing the brunt. "This is with or without limiting climate change to 2C," says co-author Detlef van Vuuren , professor of Integrated Assessment of Global Environmental Change at the Copernicus Institute and the Netherlands Environmental Assessment Agency. "Because of the slow process of sea-level rise, damages are in the first half of the century will be relatively similar. However, if we overshoot the Paris Agreement we will see an increased share of the damages in regions with higher vulnerability to climate change in the second half of the century".

"It is important that policymakers have access to accurate economic information about the damages caused by climate change under different levels of action. This study shows the Paris Agreement goals are cost-optimal-even from a narrow economic perspective," concludes van Vuuren.


Kaj-Ivar van der Wijst et al., ’New damage curves and multimodel analysis suggest lower optimal temperature’, Nature Climate Change, ’023 -01636-1