Meeting Paris climate goals could save the world trillions of dollars

Meltwater courses through the Greenland Ice Sheet.
Landscape on the Greenland Ice Sheet near Kangerlussuaq. Photo: Martin Zwick/Reda&Co/UIG via Getty Images

Meeting the more stringent global temperature targets included in the Paris climate agreement would save countries trillions of dollars in economic output, outweighing the costs of reducing emissions, new research has found.

Why it matters: The study, published Wednesday in the journal Nature, is the first to look at how global economic output would be affected under different amounts of global warming, providing policymakers with the "benefits" side of a cost-benefit analysis.

  • The study examines the historical tie between climate and economic output in 165 countries during the period from 1960 to 2010, and uses this to project future changes in economic development.

What they found: The study found that the more that the climate warms due to increasing amounts of greenhouse gases in the air, then the more that economic output in many countries would drop. Even some of the world's biggest economies — China, the U.S., and Japan — would be significantly affected if global average temperatures were to increase by two, three, or four degrees Celsius relative to preindustrial levels.

  • However, poorer countries located in the tropics would see the greatest economic losses if the world were to warm past the targets contained in the Paris agreement, which went into effect in 2016.
  • The study found that many countries in the tropics would see per capita economic output that would be 10% to 20% higher at 1.5 degrees Celsius (2.7 degrees Fahrenheit) of warming than 2 degrees Celsius (3.6 degrees Fahrenheit) of warming through 2100.
  • Only a few countries might benefit from slightly greater amounts of warming, including Scandinavian nations along with Russia, Iceland, and Canada.

The bottom line: According to study co-author Marshall Burke, by the end of the century, the world would be about 3% wealthier if global warming were limited to the Paris agreement's more stringent temperature target of 1.5 degrees Celsius, as compared to 2 degrees.

"In dollar terms this represents about $30 trillion dollars in cumulative benefits if we meet the more ambitious 1.5 degree target ... Our analysis would suggest that the benefits of meeting the stringent targets vastly outweigh the costs,”
— Marshall Burke, economist at Stanford University, on a conference call with reporters
  • The study also looked at the consequences of hitting 3 degrees Celsius (5.4 degrees Fahrenheit) of global warming, which is where the world is currently headed based on greenhouse gas emissions trends. “This will cost the globe an additional 5% to 10% of global GDP," Burke said. "Dollar-wise, that’s tens of trillions of dollars, so these are very large numbers.”
  • According to University of California at Berkeley researcher Solomon Hsiang, who was not involved in the new study, the new data provides an important new perspective. "It will cost substantial resources to transform the global energy system to be independent of fossil fuels. The analysis by Marshall and his team helps us understand whether the extra investments necessary to achieve a 1.5-degree goal are worth it," Hsiang told Axios.

Yes, but: There are considerable uncertainties associated with this study's projections. For example, a technological breakthrough could come along that would change the way society has historically responded to increasing temperatures.

  • “We cannot rule out unprecedented adaptation in the future. That is one of the inherent uncertainties in our paper,” Burke said.
  • On the other hand, Stanford climate scientist and study co-author Noah Diffenbaugh said the climate system could respond to higher levels of warming in unpredictable ways that cause even more damage, such as through the sudden, more rapid melting of ice sheets, which would trigger a sudden and damaging rise in sea levels. Climate scientists have long warned that the likelihood of such nasty surprises goes up along with global average temperatures.