Over the past century the average surface temperature of the Earth has risen about 0.7 degrees Celsius and the trend has accelerated in recent years. Other indicators of a changing global climate are a rise in sea level, also at an accelerating rate, and shifting patterns of precipitation with implications for the world’s supplies of food and fresh water.
The principal cause of this change is the carbon dioxide emitted into the atmosphere by burning the fossil fuels on which the world depends for most of its energy. Climate change is likely to prove increasingly costly as this century progresses. But any policy to curb emissions of carbon dioxide will also be costly. To what extent should society devote its resources to adapting to warming, and to what extent to curtailing it?
Ideally, policy should be designed to cut emissions to the point at which the cost of further cuts becomes greater than the benefits. But neither costs nor benefits are easily calculated. Among other complexities, neither costs nor benefits are equally distributed across space or time. People in industrialized societies like the United States and the European Union draw most of the benefits from the current high consumption of energy, but people in developing countries will disproportionately suffer the costs of rapid climate change. Similarly, today’s population enjoys the benefits of life in high-energy economies, while the heaviest costs will fall on their descendants in decades to come.
Some governments are ready to proceed with broad regulations to force down their carbon emissions. Others are less eager, fearing damage that the effort might do to their economic growth. Because it is the worldwide volume of emissions that counts, an effective regime to reduce emissions has to be international and has to include most of the world’s people. That regime has yet to be constructed.
Basic Science
Scientists do not yet completely understand the mechanisms of climate change, and any long-range forecast is full of uncertainties. But most projections suggest that rising temperatures and their effects will constitute a real threat to human welfare as this century progresses. RFF does not work in the physical sciences, but you can click here for a summary of the understanding of climate science on which RFF researchers’ analytical work is based.
Key Economic Concepts
Society faces decisions about how to respond to warming. Any answer, including the decision to do nothing, will carry substantial costs. For economists, constructing sound climate policy begins with carefully weighing the costs of the alternatives while acknowledging the uncertainties surrounding them. This summary outlines the basic economic principles underlying RFF researchers' economic analysis of climate change.
History
Political leaders have been struggling with the prospect of rapid global warming for nearly two decades. They have written treaties, set up new institutions, and carried on a vigorous debate over future directions. This historical experience now provides the foundation on which the next round of policies will be built.
Impacts
While climate change is usually discussed in terms of rising temperatures, the most significant impacts on life, including human life, may result from changes in precipitation, sea level, strength of storms, and transmission of diseases. Accurately estimating these risks and expressing them in economic terms is an essential step toward realistic climate policy.
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