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Paris Climate Agreement passes the cost-benefit test
The Paris Climate Agreement aims to keep temperature rise well below 2 °C. This implies mitigation costs as well as avoided climate damages. Here we show that independent of the normative assumptions of inequality aversion and time preferences, the agreement constitutes the economically optimal policy pathway for the century. To this end we consistently incorporate a damage-cost curve reproducing the observed relation between temperature and economic growth into the integrated assessment model DICE. We thus provide an inter-temporally optimizing cost-benefit analysis of this century’s climate problem. We account for uncertainties regarding the damage curve, climate sensitivity, socioeconomic future, and mitigation costs. The resulting optimal temperature is robust as can be understood from the generic temperature-dependence of the mitigation costs and the level of damages inferred from the observed temperature-growth relationship. Our results show that the politically motivated Paris Climate Agreement also represents the economically favourable pathway, if carried out properly.
Investment incentive reduced by climate damages can be restored by optimal policy
Increasing greenhouse gas emissions are likely to impact not only natural systems but economies worldwide. If these impacts alter future economic development, the financial losses will be significantly higher than the mere direct damages. So far, potentially aggravating investment responses were considered negligible. Here we consistently incorporate an empirically derived temperature-growth relation into the simple integrated assessment model DICE. In this framework we show that, if in the next eight decades varying temperatures impact economic growth as has been observed in the past three decades, income is reduced by ~ 20% compared to an economy unaffected by climate change. Hereof ~ 40% are losses due to growth effects of which ~ 50% result from reduced incentive to invest. This additional income loss arises from a reduced incentive for future investment in anticipation of a reduced return and not from an explicit climate protection policy. Under economically optimal climate-change mitigation, however, optimal investment would only be reduced marginally as mitigation efforts keep returns high.
Regions of intensification of extreme snowfall under future warming
Due to climate change the frequency and character of precipitation are changing as the hydrological cycle intensifies. With regards to snowfall, global warming has two opposing influences; increasing humidity enables intense snowfall, whereas higher temperatures decrease the likelihood of snowfall. Here we show an intensification of extreme snowfall across large areas of the Northern Hemisphere under future warming. This is robust across an ensemble of global climate models when they are bias-corrected with observational data. While mean daily snowfall decreases, both the 99th and the 99.9th percentiles of daily snowfall increase in many regions in the next decades, especially for Northern America and Asia. Additionally, the average intensity of snowfall events exceeding these percentiles as experienced historically increases in many regions. This is likely to pose a challenge to municipalities in mid to high latitudes. Overall, extreme snowfall events are likely to become an increasingly important impact of climate change in the next decades, even if they will become rarer, but not necessarily less intense, in the second half of the century.