Search Results
The economically optimal warming limit of the planet
Both climate-change damages and climate-change mitigation will incur economic costs. While the risk of severe damages increases with the level of global warming (Dell et al., 2014; IPCC, 2014b, 2018; Lenton et al., 2008), mitigating costs increase steeply with more stringent warming limits (IPCC, 2014a; Luderer et al., 2013; Rogelj et al., 2015). Here, we show that the global warming limit that minimizes this century's total economic costs of climate change lies between 1.9 and 2°C, if temperature changes continue to impact national economic growth rates as observed in the past and if instantaneous growth effects are neither compensated nor amplified by additional growth effects in the following years. The result is robust across a wide range of normative assumptions on the valuation of future welfare and inequality aversion. We combine estimates of climate-change impacts on economic growth for 186 countries (applying an empirical damage function from Burke et al., 2015) with mitigation costs derived from a state-of-the-art energy-economy-climate model with a wide range of highly resolved mitigation options (Kriegler et al., 2017; Luderer et al., 2013, 2015). Our purely economic assessment, even though it omits non-market damages, provides support for the international Paris Agreement on climate change. The political goal of limiting global warming to "well below 2 degrees" is thus also an economically optimal goal given above assumptions on adaptation and damage persistence. © 2019 Copernicus GmbH. All rights reserved.
Decay radius of climate decision for solar panels in the city of Fresno, USA
To design incentives towards achieving climate mitigation targets, it is important to understand the mechanisms that affect individual climate decisions such as solar panel installation. It has been shown that peer effects are important in determining the uptake and spread of household photovoltaic installations. Due to coarse geographical data, it remains unclear whether this effect is generated through geographical proximity or within groups exhibiting similar characteristics. Here we show that geographical proximity is the most important predictor of solar panel implementation, and that peer effects diminish with distance. Using satellite imagery, we build a unique geo-located dataset for the city of Fresno to specify the importance of small distances. Employing machine learning techniques, we find the density of solar panels within the shortest measured radius of an address is the most important factor in determining the likelihood of that address having a solar panel. The importance of geographical proximity decreases with distance following an exponential curve with a decay radius of 210 meters. The dependence is slightly more pronounced in low-income groups. These findings support the model of distance-related social diffusion, and suggest priority should be given to seeding panels in areas where few exist.
Post-Brexit no-trade-deal scenario: Short-term consumer benefit at the expense of long-term economic development
After the United Kingdom has left the European Union it remains unclear whether the two parties can successfully negotiate and sign a trade agreement within the transition period. Ongoing negotiations, practical obstacles and resulting uncertainties make it highly unlikely that economic actors would be fully prepared to a “no-trade-deal” situation. Here we provide an economic shock simulation of the immediate aftermath of such a post-Brexit no-trade-deal scenario by computing the time evolution of more than 1.8 million interactions between more than 6,600 economic actors in the global trade network. We find an abrupt decline in the number of goods produced in the UK and the EU. This sudden output reduction is caused by drops in demand as customers on the respective other side of the Channel incorporate the new trade restriction into their decision-making. As a response, producers reduce prices in order to stimulate demand elsewhere. In the short term consumers benefit from lower prices but production value decreases with potentially severe socio-economic consequences in the longer term.
Future heat stress to reduce people’s purchasing power
With increasing carbon emissions rising temperatures are likely to impact our economies and societies profoundly. In particular, it has been shown that heat stress can strongly reduce labor productivity. The resulting economic perturbations can propagate along the global supply network. Here we show, using numerical simulations, that output losses due to heat stress alone are expected to increase by about 24% within the next 20 years, if no additional adaptation measures are taken. The subsequent market response with rising prices and supply shortages strongly reduces the consumers’ purchasing power in almost all countries including the US and Europe with particularly strong effects in India, Brazil, and Indonesia. As a consequence, the producing sectors in many regions temporarily benefit from higher selling prices while decreasing their production in quantity, whereas other countries suffer losses within their entire national economy. Our results stress that, even though climate shocks may stimulate economic activity in some regions and some sectors, their unpredictability exerts increasing pressure on people’s livelihood.
Enhanced economic connectivity to foster heat stress-related losses
Assessing global impacts of unexpected meteorological events in an increasingly connected world economy is important for estimating the costs of climate change. We show that since the beginning of the 21st century, the structural evolution of the global supply network has been such as to foster an increase of climate-related production losses. We compute first- and higher-order losses from heat stress–induced reductions in productivity under changing economic and climatic conditions between 1991 and 2011. Since 2001, the economic connectivity has augmented in such a way as to facilitate the cascading of production loss. The influence of this structural change has dominated over the effect of the comparably weak climate warming during this decade. Thus, particularly under future warming, the intensification of international trade has the potential to amplify climate losses if no adaptation measures are taken.