The Economic Benefits of Achieving the Paris Agreement Goals

The 2023 Global Stocktake (GST) that is scheduled to conclude at COP28 offers an opportunity to not only look back and measure progress toward the Paris Agreement goals but also look ahead and consider the benefits of achieving them. Estimating the economic benefits of reducing climate change requires a model that incorporates both socioeconomic and climatological elements, accounting for both the long-lived repercussions of near-term emissions and uncertainty in future emissions and temperature trajectories.In this issue brief, we use the Greenhouse Gas Impact Value Estimator (GIVE) model (Rennert et al. 2022) to estimate the global economic benefits of limiting temperature rise to the Paris Agreement targets of 1.5°C and “well below” 2°C above preindustrial levels. We construct modified versions of the GIVE model that are calibrated to meet these targets, and we compare them to the baseline model, which combines estimates made by a panel of experts about future population, GDP, and emissions trajectories with a robust climate model to arrive at a central outcome of 2.5°C above preindustrial levels in 2100. This baseline reflects an estimate of anticipated future emissions pathways as of the date of the elicitation, which was conducted in 2021. This sets it apart from business-as-usual scenarios because it captures the benefits that experts estimated would be achieved with the knowledge that they possessed at the time.We find that mitigation efforts that reduce expected warming from that scenario with a 2.5°C central temperature outcome to instead remain well below 2°C would generate cumulative expected economic benefits of $467 trillion in present value through 2300, equivalent to 1.5 percent of the cumulative expected present value of global GDP over the same time frame. In equivalent annual terms, this $467 trillion figure corresponds to $5.2 trillion in annual benefits. Holding the temperature increase to below 1.5°C would generate an additional $138 trillion, bringing the total benefits to $605 trillion or 2 percent of cumulative GDP. $605 trillion amounts to $6.8 trillion in equivalent annual terms.These estimated benefits incorporate the societal impacts of climate change that research suggests are most significant, but many other impacts have yet to be accounted for. Furthermore, our estimates represent incremental benefits from increasingly ambitious scenarios, but even the baseline scenario reflects some of the progress made since the Paris Agreement was signed and how such progress influenced our expert panel’s expectations for the future. For both of these reasons, our results should be understood as conservative estimates of the total benefits of achieving the agreement’s goals.