Large potential reduction in economic damages under UN mitigation targets

Area of Science:

• Climate economics
• Global environmental policy
• Socioeconomic impact assessment

Background:

• International climate agreements set global warming thresholds as policy targets.
• Economic benefits of achieving temperature targets are poorly understood.
• Uncertainties exist in temperature change patterns, economic output response, and societal consumption preferences.

Purpose of the Study:

• To quantify economic damages associated with United Nations (UN) global warming targets (1.5°C and 2°C).
• To assess economic impacts of current UN national-level mitigation commitments (approaching 3°C warming).
• To evaluate the relative economic benefits of achieving different global warming thresholds.

Main Methods:

• Combined historical evidence with national-level climate and socioeconomic projections.
• Quantified economic damages for 1.5°C, 2°C, and 2.5°C-3°C warming scenarios.
• Utilized a 3% discount rate for calculating accumulated global benefits.

Main Results:

• A >75% chance of reduced economic damages by limiting warming to 1.5°C versus 2°C.
• >60% chance of accumulated global benefits exceeding $20 trillion (at 3% discount rate) for 1.5°C.
• 71% of countries (90% of global population) have >75% chance of reduced damages at 1.5°C, with poorer nations benefiting most.
• Projected 15%-25% reduction in per capita output by 2100 for 2.5°C-3°C warming, and >30% for 4°C warming.

Conclusions:

• Achieving the 1.5°C target is likely to reduce aggregate economic damages and global inequality.
• Failing to meet the 2°C target is likely to substantially increase economic damages.
• Results may understate 1.5°C benefits if extreme outcomes occur at 2°C but not 1.5°C.