John Muellbauer, Janine Aron, 24 March 2022

A key common feature of the global climate crisis and the Global Financial Crisis (GFC) lies in destabilising feedback loops. This column identifies and compares these highly non-linear processes, with lessons for policymakers and modellers. The cascades and contagion of the financial accelerator have climate parallels. Absent decisive action, accumulating greenhouse gases, in raising global temperatures, will lead to more carbon release and even higher temperatures, ultimately rendering much of the planet uninhabitable. Russia’s war creates immediate separate crises for the financial and global climate systems. By delaying approaches to net zero, their linkages increase future financial stability risks.

Jason Furman, Ron Shadbegian, Jim Stock, 25 February 2015

The cost of delaying climate action has been studied extensively. This column discusses new findings based on a meta-analysis of published model runs. A one-decade delay in addressing climate change would lead to about a 40% increase in the net present value cost of addressing climate change. If anything, the methodology used in this analysis could understate the cost of delay. Uncertainty and the possibility of tipping points provide a motivation for more action as a form of insurance against worse outcomes.

David Hendry, 27 October 2014

Climate change has been the main driver of mass extinctions over the last 500 million years. This column argues that current evidence provides a stark warning. Human activity is producing greenhouse gases, and as a consequence global temperatures and ocean heat content are rising. Such trends raise the risk of tipping points. Economic analysis offers a number of ideas, but a key problem is that distributions of climate variables can shift, invalidating stationarity-based analyses, and making action to avoid possible future shifts especially urgent.

Rick van der Ploeg, Aart De Zeeuw, 31 July 2014

Many ecological systems feature ‘tipping points’ at which small changes can have sudden, dramatic, and irreversible effects, and scientists worry that greenhouse gas emissions could trigger climate catastrophes. This column argues that this renders the marginal cost-benefit analysis usually employed in integrated assessment models inadequate. When potential tipping points are taken into account, the social cost of carbon more than triples – largely because carbon emissions increase the risk of catastrophe.


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