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New damage curves and multimodel analysis suggest lower optimal temperature

Author

Listed:
  • Kaj-Ivar Wijst

    (PBL Netherlands Environmental Assessment Agency
    Utrecht University)

  • Francesco Bosello

    (RFF-CMCC European Institute on Economics and the Environment (EIEE), Fondazione Centro Euro-Mediterraneo sui Cambiamenti Climatici
    CMCC@Ca’Foscari Centro Euro-Mediterraneo sui Cambiamenti Climatici, Università Ca’Foscari
    Ca’Foscari University of Venice)

  • Shouro Dasgupta

    (RFF-CMCC European Institute on Economics and the Environment (EIEE), Fondazione Centro Euro-Mediterraneo sui Cambiamenti Climatici
    CMCC@Ca’Foscari Centro Euro-Mediterraneo sui Cambiamenti Climatici, Università Ca’Foscari
    Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science (LSE))

  • Laurent Drouet

    (RFF-CMCC European Institute on Economics and the Environment (EIEE), Fondazione Centro Euro-Mediterraneo sui Cambiamenti Climatici)

  • Johannes Emmerling

    (RFF-CMCC European Institute on Economics and the Environment (EIEE), Fondazione Centro Euro-Mediterraneo sui Cambiamenti Climatici)

  • Andries Hof

    (PBL Netherlands Environmental Assessment Agency
    Utrecht University)

  • Marian Leimbach

    (Potsdam Institute for Climate Impact Research, Member of the Leibniz Association)

  • Ramiro Parrado

    (RFF-CMCC European Institute on Economics and the Environment (EIEE), Fondazione Centro Euro-Mediterraneo sui Cambiamenti Climatici
    CMCC@Ca’Foscari Centro Euro-Mediterraneo sui Cambiamenti Climatici, Università Ca’Foscari)

  • Franziska Piontek

    (Potsdam Institute for Climate Impact Research, Member of the Leibniz Association)

  • Gabriele Standardi

    (RFF-CMCC European Institute on Economics and the Environment (EIEE), Fondazione Centro Euro-Mediterraneo sui Cambiamenti Climatici
    CMCC@Ca’Foscari Centro Euro-Mediterraneo sui Cambiamenti Climatici, Università Ca’Foscari)

  • Detlef Vuuren

    (PBL Netherlands Environmental Assessment Agency
    Utrecht University)

Abstract

Economic analyses of global climate change have been criticized for their poor representation of climate change damages. Here we develop and apply aggregate damage functions in three economic Integrated Assessment Models (IAMs) with different degrees of complexity. The damage functions encompass a wide but still incomplete set of climate change impacts based on physical impact models. We show that with medium estimates for damage functions, global damages are in the range of 10% to 12% of GDP by 2100 in a baseline scenario with 3 °C temperature change, and about 2% in a well-below 2 °C scenario. These damages are much higher than previous estimates in benefit-cost studies, resulting in optimal temperatures below 2 °C with central estimates of damages and discount rates. Moreover, we find a benefit-cost ratio of 1.5 to 3.9, even without considering damages that could not be accounted for, such as biodiversity losses, health and tipping points.

Suggested Citation

  • Kaj-Ivar Wijst & Francesco Bosello & Shouro Dasgupta & Laurent Drouet & Johannes Emmerling & Andries Hof & Marian Leimbach & Ramiro Parrado & Franziska Piontek & Gabriele Standardi & Detlef Vuuren, 2023. "New damage curves and multimodel analysis suggest lower optimal temperature," Nature Climate Change, Nature, vol. 13(5), pages 434-441, May.
    • Handle: RePEc:nat:natcli:v:13:y:2023:i:5:d:10.1038_s41558-023-01636-1
    DOI: 10.1038/s41558-023-01636-1
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    Cited by:

    1. Francisco Estrada & Miguel A. Altamirano del Carmen & Oscar Calderon-Bustamante & W. J. Wouter Botzen & Serafin Martinez-Jaramillo & Stefano Battiston, 2024. "Assessing the physical risks of climate change for the financial sector: a case study from Mexico's Central Bank," Papers 2411.18834, arXiv.org.
    2. Simone Borghesi & Jacopo Cammeo, 2025. "The Macroeconomic Impact of Different Decarbonization Paths and Strategies," EconPol Policy Reports 55, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Chang, Jun-Jie & Mi, Zhifu & Wei, Yi-Ming, 2023. "Temperature and GDP: A review of climate econometrics analysis," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 383-392.
    4. Christian P. Fries & Lennart Quante, 2023. "Intergenerational Equitable Climate Change Mitigation: Negative Effects of Stochastic Interest Rates; Positive Effects of Financing," Papers 2312.07614, arXiv.org, revised Dec 2024.
    5. Castellini, Marta & Castelli, Chiara & Gusperti, Camilla & Lupi, Veronica & Vergalli, Sergio, 2025. "Balancing climate policies and economic development in the Mediterranean countries," Energy Economics, Elsevier, vol. 145(C).
    6. Thomas Knoke & Nick Hanley & Rosa Maria Roman-Cuesta & Ben Groom & Frank Venmans & Carola Paul, 2023. "Trends in tropical forest loss and the social value of emission reductions," Nature Sustainability, Nature, vol. 6(11), pages 1373-1384, November.

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