Expert Consensus on the Economics of Climate Change

Given that effective climate change policy must balance the costs of action and the likely economic damages from inaction, the views of economists about climate change are particularly important. A er decades of research and debate, the scienti c community has developed widespread consensus that action to reduce greenhouse gas emissions is necessary. However, policymakers and journalists o en portray economists as more conservative than scientists when it comes to climate policy, possibly due to their focus on market-driven adaptation and the costs of mitigation.

In an e ort to clarify the level of consensus among economists with respect to climate change risks, economic impacts, and policy responses, we conducted a survey of expert economists. Our survey builds on a similar 2009 survey conducted by other researchers at the Institute for Policy Integrity. We surveyed all those who have published an article related to climate change in a highly ranked, peer-reviewed economics or environmental economics journal since 1994. is survey allowed us to compare the views of economic experts to the views of the general public and help establish expert consensus on the likely economic impacts of climate change and the recommended policy responses. e survey also provides insights about the appropriate assumptions to use in “integrated assessment models” – the climate-economic models that many policymakers consult to inform climate policy decisions.

We designed a 15-question online survey with questions focused on climate change risks, economic damage estimates, and policy responses. We invited the 1,103 experts who met our selection criteria to participate, and we received 365 completed surveys. e survey data revealed several key ndings:

• Experts on the economics of climate change expressed higher levels of concern about climate change impacts than the general public, when asked identical survey questions.
• Economic experts believe that climate change will begin to have a net negative impact on the global economy very soon – the median estimate was “by 2025,” with 41% saying that climate change is already negatively a ecting the economy.
• Respondents believe that numerous sectors of the U.S. economy will be harmed by climate change. A majority predicted negative impacts on agriculture (94%), shing (78%), utilities (electricity, water, sanitation – 74%), forestry (73%), tourism/outdoor recreation (72%), insurance (66%), and health services (54%).
• More than three-quarters of respondents believe that climate change will have a long-term, negative impact on the growth rate of the global economy.
• More than 80% of experts believe that the United States may be able to strategically induce other nations to reduce their greenhouse gas emissions by rst adopting policies to reduce U.S. emissions.
• Respondents overwhelmingly support unilateral emissions reduction commitments by the United States, regardless of the actions other nations have taken (77% chose this option over alternatives such as commi ing only if multilateral agreements are reached).

• The vast majority (75%) of respondents believe that the most economically e cient way for states to comply with the U.S. Environmental Protection Agency’s “Clean Power Plan” carbon regulations is through “market-based mechanisms coordinated at a regional or national level (such as a regional/ national trading program or carbon tax).”
• The discounting approach that the U.S. government currently uses to analyze climate regulations and other policies – a constant discount rate calibrated to market rates – was identi ed by experts as the least desirable approach for se ing discount rates in the context of climate policies. Nearly half (46%) of respondents favored an approach that featured declining discount rates, while 44% favored using rates calibrated with ethical parameters.
• On average, economic experts predicted far higher economic impacts from climate change than the estimates found in older surveys of economists and other climate experts. Respondents predicted a global GDP loss of roughly 10% if global mean temperature increases by 3°C relative to the pre-industrial era by 2090 (this increase approximates a “business as usual” emissions scenario).
• Experts believe that there is greater than a 20% likelihood that this same climate scenario would lead to a “catastrophic” economic impact (de ned as a global GDP loss of 25% or more).

Our findings revealed a strong consensus (69%) that the “social cost of carbon” should be greater than or equal to the gure currently used by the U.S. government (only 8% believe the value should be lower).These findings strongly suggest that policymakers in the United States and elsewhere should be concerned about a lack of action on climate change. In particular, economists seem to believe that the United States would bene t from enacting strong domestic climate policies in the near term regardless of any concerns about “free-riding” by other countries. Our results also suggest that the integrated assessment models used to calculate the social cost of carbon are likely underestimating climate damages. ere is clear consensus among economic experts that climate change poses major risks to the economy and that signi cant policy responses will be needed to avoid large economic damages.