The Economic Climate: Establishing Consensus on the Economics of Climate Change

While the scientific community has established a fairly clear consensus on the threat of climate change, policymakers and journalists often suggest that the economic community lacks a consensus view on climate change risks and appropriate policy responses. We conducted a survey of 1,103 experts on the economics of climate change – all those who have authored an article related to climate change in a highly ranked economics or environmental economics journal since 1994 – and our results reveal several areas where expert consensus exists, and others where more research is necessary. In casting a wider net than many previous surveys of economists on climate change, we avoid many of the pitfalls of previous studies. Of the 1,103 experts that received the survey, 365 responded – a response rate of approximately 33%. Though the response rate varied from question to question – particularly for open-ended questions – it never dipped below 20%. There are several key takeaways from our results, particularly with respect to the magnitude of the social cost of carbon. Economic experts believe that climate change will begin to have a net negative impact on the global economy very soon – the median estimate was “by 2025.” On average, economists also predict far higher economic impacts from climate change than the estimates found in landmark surveys from the 1990s (Nordhaus, 1994; Schauer, 1995). Also while experts on climate economics did not support a constant discount rate calibrated to market rates – the current methodology employed to estimate the US social cost of carbon –respondents recommended rates lower than (or roughly equal to the lower ranges of) those used by the U.S. government in these calculations. Given these results, it is unsurprising that our findings revealed a strong consensus that the SCC should be greater than or equal to the current $37 estimate. While these results indicate a growing consensus that current damage and SCC impacts are too low, the high variance of our results indicate that considerable work is still necessary to improve the values used for discount rates and climate impact assumptions. From a policy perspective, our findings also strongly suggest that U.S. policymakers should be concerned about a lack of action on climate change. Experts believe that the United States may be able to strategically induce other nations to reduce GHG emissions by adopting policies to reduce U.S. emissions. Respondents also support unilateral emission reductions by the United States, regardless of the actions other nations have taken. These results appear to confirm an economic consensus that domestic climate policies should be enacted immediately to address climate change.