The study was carried out by IVM researchers Francisco Estrada and Wouter Botzen using CLIMRISK, a newly developed integrated assessment model of climate change and economy.
CLIMRISK is a spatially explicit policy evaluation integrated assessment model (IAM) for the estimation of the risks and economic damages of climate change. This IAM was developed as part of an ongoing collaboration between the Center for Atmospheric Sciences of the National Autonomous University of Mexico and the Institute for Environmental Studies (IVM). This model has unique features that allow a more complete and detailed characterisation of the consequences of climate change and of the benefits of climate policy. In CLIMRISK the socioeconomic and climate scenarios, vulnerability, impacts and risks are resolved at a spatial resolution of about 50km x 50km at the equator for the whole world, which is much more detailed than previous IAMs. This model combines probabilistic global climate change scenarios with local warming in urban areas produced by the urban heat island (UHI) to generate estimates of the economic impacts of climate change and uni- and multi-variate dynamic risk measures. These risk measures capture both economic impacts and temperature and precipitation changes that are important for ecosystems.
The results indicate that climate change impacts may have been severely underestimated in previous studies due to modelling limitations and the omission of the synergistic effects between the UHI effect and global warming. CLIMRISK estimates the total economic impacts of climate change over this century, which can be expressed in the present value relative to 2010 GDP levels to get an impression of the size of these damages from climate change. For instance, under a high scenario of greenhouse gas emissions (RCP8.5), the present value of the total economic impacts of climate change over this century could be equivalent to losing between twice and eight times the global GDP in 2010. The distribution of economic damages is highly heterogeneous. Regions such as the European Union and the US experience damages over this century that are equivalent to losing about one and two times their 2010 GDP levels, while for Africa this figure could represent between 8 and 53 times their 2010 GDP levels, respectively.
Major cities in the world could experience annual losses exceeding 1 billion US dollars during the present decade, and major biodiversity and social risk thresholds identified in the literature could be reached before 2050. However, even moderate mitigation efforts such as those in the current Nationally Determined Contributions (NDCs) that countries have submitted as their intended contribution to the international Paris agreement could delay reaching some of these risks by a decade or more. Full compliance with the goals of the Paris Agreement would produce large benefits in terms of avoided damages and would prevent the occurrence of some of the worst risks of climate change during this century. Non-compliance with the mitigation commitments of large emitters, such as the US or China, would result in significant loses for themselves and impose disproportionate economic costs and risks on other regions. The results underscore the important economic benefits of adhering to reductions in greenhouse gas emissions that countries agreed upon in the Paris agreement.
Link to the full paper: https://nyaspubs.onlinelibrary.wiley.com/doi/10.1111/nyas.14652
Contact: Francisco Estrada: firstname.lastname@example.org
The graph shows: CLIMRISK’s projections of economic damages in year 2100 under a high emissions scenario (RCP8.5; upper panel) and under full compliance of the Paris Agreement mitigation goals (RCP3PD; lower panel)