The macroeconomics of climate change: a review of existing techniques to model the impacts of climate change and the role of adaptation

Description

The project surveys state-of-the-art research on the macroeconomic effects of climate change on advanced economies and how adaptation can help to manage these. Over the last decade a technical literature has emerged which engages with the various potential macroeconomic effects of climate change. Models applying a wide variety of methodological approaches have been developed in an attempt to predict and quantify the impact of global warming on the economy. While significant progress has been made, the literature remains inaccessible to a non-specialist audience.
Two recent developments have indicated that a more thorough and widespread understanding of these models could greatly improve environmental and economic decision making. First, it has become clear that whether or not these models take into account the existence of ‘disaster’ scenarios – high impact, low probability events – can greatly affect the extent to which costly ameliorative actions are desirable. Second, as the reality of significant global warming draws closer, the potential of adaptation for minimising the macroeconomic and social damage of climate change has become a key policy concern.
Finally, there are proposals for quantifying the value of adaptation based on the use of macroeconomic modeling. Throughout, the key role played by assumptions concerning high impact, low probability events will be emphasized. The result is an accessible source of the most relevant and up-to-date information on the interactions between climate change and the macroeconomy, and what this implies for our thinking on adaptation.

Reference information