By Neil Irwin
By now, it’s clear that climate change poses environmental risks beyond anything seen in the modern age. But we’re only starting to come to grips with the potential economic effects.
Using increasingly sophisticated modeling, researchers are calculating how each tenth of a degree of global warming is likely to play out in economic terms. Their projections carry large bands of uncertainty, because of the vagaries of human behavior and the remaining questions about how quickly the planet will respond to the buildup of greenhouse gases.
A government report in November raised the prospect that a warmer planet could mean a big hit to G.D.P. in the coming decades.
And on Thursday, some of the world’s most influential economists called for a tax on carbon emissions in the United States, saying climate change demands “immediate national action.” The last four people to lead the Federal Reserve, 15 former leaders of the White House Council of Economic Advisers, and 27 Nobel laureates signed a letter endorsing a gradually rising carbon tax whose proceeds would be distributed to consumers as “carbon dividends.”
Seeking a baseline to devise environmental regulations, the Obama administration set out to calculate a “social cost of carbon,” the amount of harm each new ton of carbon emissions will cause in decades ahead.
At the core of the project were sophisticated efforts to model how a hotter earth will affect thousands of different places. That’s necessary because a low-lying region that already has many hot days a year is likely to face bigger problems, sooner, than a higher-altitude location that currently has a temperate climate.
Michael Greenstone, who is now director of the Becker Friedman Institute at the University of Chicago and of the Energy Policy Institute there, as well as a contributor to The Upshot, was part of those efforts.
“We’ve divided the world into 25,000 regions and married that with very precise geographic predictions on how the local climate will change,” Mr. Greenstone said. “Just having the raw computing power to be able to analyze this at a more disaggregated level is a big part of it.”
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