While existance of human-caused global warming is overwhelmingly accepted models of its economic consequences are poorly developed and need sharpening. These are very complex as there are so many moving parts and errors can be large but improvements can be very useful. A piece in Nature notes while the costs of carbon emissions are currently underestmated, they are still valuable for setting policy.
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As legal, climate-science and economics experts, we believe that the current estimate for the social cost of carbon is useful for policy-making, notwithstanding the significant uncertainties. The leading economic models all point in the same direction: that climate change causes substantial economic harm, justifying immediate action to reduce emissions. In fact, because the models omit some major risks associated with climate change, such as social unrest and disruptions to economic growth, they are probably understating future harms. The alternative — assigning no value to reductions in carbon dioxide emissions — would lead to regulation of greenhouse gases that is even more lax.
Instead, climate-economic models need to be extended to include a wider range of social and economic impacts. Gaps need to be filled, such as the economic responses of developing countries and estimates of damages at extreme temperatures. Today, only a handful of researchers in the United States and Europe specialize in such modelling. A broader programme involving more people exploring more phenomena is needed to better estimate the social cost of carbon and to guide policy-makers. Otherwise policies will become untethered from economic realities.
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