Bridging the Gap Between Climate Science and Economic Policy

Climate change is like a freight train barreling down the tracks - we know it's coming but feel powerless to stop it. Despite increasingly dire warnings from climate scientists, a disconnect remains between their projections and the economic modeling guiding policymakers. This dangerous divide is fueling further climate inaction. To get the train under control, we must evolve how we assess climate-related risks.

Rethinking Emissions Reductions

• Most climate discussions have centered on reducing emissions intensity - the amount of CO2 released per unit of economic output. But absolute emissions are the true driver of global warming, not intensity metrics.
• GHG emissions continue to rise year after year, hitting a new record high in 2021 after a brief Covid-induced dip. We are still emitting ~40 gigatonnes of CO2 annually.  
• At this pace, temperatures will exceed 2°C by 2050. Like a freight train picking up speed, climate change is accelerating. Intensity reductions are sideshows distracting from the main event of absolute cuts.

Challenging Economic Orthodoxy

• Standard economic models estimate relatively muted GDP impacts from climate change, even under drastic warming scenarios. For example, current NGFS models show just a 7-14% GDP decline under 3.5°C warming.
• Such analyses underestimate the unprecedented challenges posed by climate change. They fail to account for certainties like green swan events - low probability, high-impact occurrences that will arise with greater frequency.
• Economists must break tradition and stop applying backward-looking risk models. This complacency encourages policy inaction. New forward-looking, scenario-based approaches are essential.

Adopting Realistic Time Horizons

• Key climate risk assessments for European financial institutions are slated for 2025-2030. But economists agree the economic brunt of climate change won't manifest until 2050-2080.  
• Short time horizons will yield non-informative results. A false sense of security could further delay action when rapid response is needed.
• 30-60 year projections are required to properly evaluate climate impacts. This perspective exposes the true costs of inaction, informing policies that reflect the scale of the crisis.

Conclusion

The climate freight train is accelerating, but our economic modelling remains stuck at the station. Bridging this divide is imperative to prompt policymakers into action. By breaking from tradition, adopting realistic time horizons, and rethinking risk assessments, economists can help slam on the brakes before it's too late. The survival of our economies and societies hangs in the balance.

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