By Timothy Neal, UNSW Sydney

Scientists say severe climate change is now the greatest threat to humanity. Extreme weather is expected to upend lives and livelihoods, intensifying wildfires and pushing ecosystems towards collapse as ocean heatwaves savage coral reefs. The threats are far-reaching and widespread.

So what effect would you expect this to have on the economy in coming decades? It may surprise you, but most economic models predict climate change will just be a blip, with a minor impact on gross domestic product (GDP).

Heating the planet beyond 3℃ is extraordinarily dangerous. The last time Earth was that warm was three million years ago, when there was almost no ice and seas were 20 metres higher. But economic models predict even this level of heat to have very mild impacts on global GDP per capita by century’s end. Most predict a hit of around 1% to 7%, while the most pessimistic modelling suggests GDP shrinking by 23%.

In these models, some countries are completely unaffected by climate change. Others even benefit. For most countries, the damage is small enough to be offset by technological growth. Australia’s recent Intergenerational Report suggests something similar….

https://www.juancole.com/2023/10/economists-underestimated-financial.html