IDEAS home Printed from https://ideas.repec.org/p/ssa/lemwps/2025-16.html
   My bibliography  Save this paper

A Complex System Perspective on the Economics of Climate Change, Boundless Risk, and Rapid Decarbonization

Author

Listed:
  • Francesco Lamperti
  • Giovanni Dosi
  • Andrea Roventini

Abstract

Climate change stands as one of the most formidable challenges in the twenty-first century. Despite this, our understanding of the unfolding and interconnection of climate-related physical and transitional risks, and their implications for socioeconomic dynamics along various transition pathways, remains insufficient. This deficit of understanding echoes throughout the formulation of effective climate change policies. In this context, our chapter emphasizes the need for a comprehensive and interdisciplinary approach to address climate change. Such an approach must (1) credibly encompass the immense risks that global warming exerts on the Earth system; (2) account for the intricate processes of technical change and technology diffusion that are at the core of the low-carbon transition; (3) allow the percolation of risks and opportunities across sectors and regions; (4) account for behavioral change in consumption dynamics; and (5) allow testing of a wide range of climate policies and their robustness. Complex-systems science offers distinct vantage points for framing the intricate climate challenge. While outlining current research gaps, we argue that the current generation of climate-economy models rooted in complex systems provides a promising starting point to fill these gaps. We delve into a series of findings that evaluate the material impact of climate risks on economic and financial stability and explore alternative trajectories for policy implementation. Our analysis underscores the ability of complex-systems models to account for the extreme costs of climate change and the emergence of critical tipping points, wherein unmitigated emissions lead to free-falling declines in long-term growth and catalyze financial and economic instability. Given such findings, we argue that a complex-systems perspective on climate change advocates for stricter and earlier policy interventions than do traditional climate economy models. These policies can transform the seemingly antithetical objectives of decarbonization and economic growth in standard models into complementary ones. We assert that a combination of regulation and green industrial policies can nurture eco-friendly investments and foster technological innovation, thus steering the economy onto a zero-carbon sustainable growth pathway. These results challenge conventional precepts in the realm of cost-benefit climate economics and offer the building blocks for a more robust and realistic framing of the climate challenge.

Suggested Citation

  • Francesco Lamperti & Giovanni Dosi & Andrea Roventini, 2025. "A Complex System Perspective on the Economics of Climate Change, Boundless Risk, and Rapid Decarbonization," LEM Papers Series 2025/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  • Handle: RePEc:ssa:lemwps:2025/16
    as

    Download full text from publisher

    File URL: http://www.lem.sssup.it/WPLem/files/2025-16.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssa:lemwps:2025/16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge The email address of this maintainer does not seem to be valid anymore. Please ask the person in charge to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/labssit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.