An updated cost-benefit analysis for climate change
I believe you can’t put a proper price on natural ecosystems and basic human rights. But since we may not have another choice, here is a compelling economic cost-benefit analysis. It works with an updated damage function, which had been seriously flawed in previous cost-benefit assessments. The update was much needed, but in addition, there are important fat-tail risks to be taken into account in the future.
Quote: “…We use this updated damage function to derive the cost-benefit optimal climate policy that begins with the year 2020. In this economically optimal scenario, mitigation is actively pursued to maximize global welfare. We continue holding the assumption of DICE-2013 that significant negative-emission technologies are not available in this century. We contrast the optimal policy with the business-as-usual (BAU) scenario, in which climate policy is absent. We find that under these conditions the 2 °C target as set by the Paris Climate Agreement gives the cost-benefit optimal pathway till the end of this century. We observe that this finding is largely robust to diverse uncertainties. Our results thus advocate for rapid and decisive implementation of the Paris Climate Agreement…”
