Ten Facts about the Economics of Climate Change and Climate Policy

The world’s climate has already changed measurably in response to accumulating greenhouse gas (GHG). Considerable uncertainties surround both the extent of future climate change and the biophysical impacts of such change. Despite the uncertainties, climate scientists strongly agree that in the absence of measures to significantly reduce GHG emissions, the changes in climate will be substantial – with long-lasting effects on many of Earth’s physical and biological systems. There are significant risks associated with low probability but potentially catastrophic outcomes. Although a focus on median outcomes alone warrants efforts to reduce emissions of GHGs, economists argue that the uncertainties and associated risks justify more aggressive policy action than otherwise would be warranted.