Top economists say the economic effects of climate change are just beginning to be felt — and they're likely to start snowballing, Courtenay Brown reports.
- Why it matters: Wildfires, floods and other natural disasters could harm the nation's financial backbone, damaging electronic payment systems, causing bank failures, and disrupting the economy in myriad unanticipated ways.
The Federal Reserve — arguably the most influential economic body in the world — held its first-ever climate change research conference yesterday at the San Francisco Fed, where economists sounded the alarm:
- Global GDP per capita could fall 7% by 2100 in the absence of climate change mitigation effects, according to a paper presented by Hashem Pesaran, a USC economist.
- If countries abide by the Paris Accord, that would bring that loss down to 1%.
- Extreme heat impacts the productivity of workers. For each degree the temperature rises above a daily average temperature of 59°F, productivity declines by 1.7% — a figure that Sandra Batten, a senior research economist at the Bank of England, cited in research presented yesterday.
The big picture, from Axios' Amy Harder: The Fed's attention to the problem stands in stark contrast to the Trump administration.
- President Trump started the formal process to withdraw the U.S. from the Paris Climate Agreement this week, and is working to repeal virtually every climate-related policy his predecessor pushed.
The Fed event took place in California, where increasingly destructive wildfires have pushed the state's top utility, PG&E, into bankruptcy. And it provided some of the firmest evidence to date that global warming could finally become a core issue in monetary policy, potentially influencing Fed decisions on interest rates.
- "Early research suggests that increased warming has already started to reduce average output growth in the United States," San Francisco Fed president Mary Daly said.
- "And future growth may be curtailed even further as temperatures rise."
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