Climate change costs: Recent advancements in the economic assessment

Fankhauser, Samuel and Tol, Richard S J (1996) Climate change costs: Recent advancements in the economic assessment. Energy Policy, 24 (7). pp. 665-673. ISSN 0301-4215

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Climate change is unique among the consequences of fossil fuel burning in its far reaching impact, both spatially and temporally. Earlier studies estimate the aggregated monetized damage due to climate change at 1.5 to 2.0% of world GDP (for 2 × CO2); the OECD would lose 1.0 to 1.5% of GDP; the developing countries 2.0 to 9.0%, according to these estimates. These figures are not comprehensive and highly uncertain. Newer studies increasingly emphasize adaptation, variability, extreme events, other (non-climate change) stress factors and the need for integrated assessment of damages. As a result, differences in impacts between regions and sectors have increased, the market impacts in developed countries tended to fall, and non-market impacts have become increasingly important. Marginal damages are more interesting from a policy point of view. Earlier estimates range from about US$5 to US$125 per tonne of carbon, with most estimates at the lower end of this range. These figures are based on polynomial functions in the level of climate change, but the rate of change may be equally important, as are the speed of adaptation, restoration and value adjustment. Furthermore, future vulnerability to climate change will be different from current vulnerability. On the whole, the market impacts fall (relatively) with economic growth while the non-market impacts rise (relatively) with growth.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences > GE170 Environmental policy
H Social Sciences > HB Economic theory. Demography
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Depositing User: Richard Tol
Date Deposited: 23 Apr 2012 11:37
Last Modified: 30 Nov 2012 17:12
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