Costs of Climate Change Hugely Underestimated

April 1, 2015 Updated: April 7, 2015

Look at most climate change projection graphs and you will see a smoothly rising red line of increasing temperature, melting ice, and other impacts. But climate does not work that way. Studies of the paleoclimate record indicate that when heat energy is rapidly added to the atmosphere—as humans are doing today—the climate can experience “tipping points,” with abrupt shifts and potentially disastrous results.

Researchers who have studied economic climate change impacts have until recently based their cost-benefit analyses on that smoothly rising line—resulting in relatively small estimated economic losses. Now a group of researchers has taken climate change tipping points into account in their analyses published in Proceedings of the National Academy of Sciences, finding that such abrupt events could be highly disruptive and destructive to the global economy.

The international research team found that previous cost-benefit assessments of global climate policy may be significantly underestimating the economic need for controlling climate change.

“Most current cost-benefit analyses of climate change suggest [that] global climate policy should be relatively weak,” wrote the researchers. “However, relatively few studies account for the market or nonmarket impacts of passing environmental tipping points that cause abrupt and irreversible damages.”

Climate tipping points are acknowledged and expected by scientists. There will, they note, likely be moments in the decades ahead when climate forcings—our adding of carbon to the atmosphere, holding in more and more heat energy—will result in sudden climactic shifts, much like a car jumping from one gear up to the next.

Such tipping points are chaotic and random, and cannot be predicted with any certainty. They can occur on a global scale—the slowing and weakening of the global ocean circulation system, something scientists recently reported is starting to happen. Or such climate change effects can be local, the eutrophication of a lake, for example, as appears to be occurring in Africa’s Lake Victoria.

The researchers used an Integrated Assessment Model (IAM) to compute what could happen economically if a single global climate change tipping point were reached, caused possibly by a total failure of the West African or Indian monsoons, or “abrupt forest dieback, [which] has been forecast in both the Amazon and boreal regions in future.”

Such a tipping point, they wrote, would have major nonmarket impacts, such as degrading ecosystem services, as well as market impacts, negatively impacting food and energy production and other sectors of the economy.

The study estimated a threefold increase in estimated carbon taxes is now needed in order to pay for the future mitigation that may be required when nonmarket and market services are suddenly damaged by a tipping point event. The authors wrote that one such event could increase the need for an initial carbon tax of $45 per ton of emitted carbon to $154 per ton. The likelihood of such a random event increases dramatically with each degree rise in average global temperature.

“Environmental tipping points can profoundly alter [climate change] cost-benefit analysis, justifying a much more stringent climate policy, which takes the form of a higher immediate price on carbon,” states the study.

The scientists recommend that when carbon taxes are calculated, they should be adjusted much higher to take into consideration the likelihood of random tipping points that will violently disrupt ecosystems and economies.

“Our results might still be too optimistic compared with actual climate change, because here we consider cases in which the economy faces only a single tipping point,” they wrote. “In reality, ecosystem risks exist at many levels and in many forms; therefore, multiple tipping points are likely to exist.”

The researchers underline the urgent need for further study of climate tipping points. They also recommend evaluation of the risk of tipping points in much the same way that many societies reduce the risk of home fires and estimate fire insurance.

“In the context of emission control decisions, this means that the economy should significantly increase emission reduction at present to avoid environmental tipping point risk in the future,” they wrote.


  • Yongyang Cai, Kenneth L. Judd, Timothy M. Lenton, Thomas S. Lontzek, and Daiju Narita Environmental tipping points significantly affect the cost−benefit assessment of climate policies PNAS 2015 ; published ahead of print March 30, 2015, doi:10.1073/pnas.1503890112

This article was written by Glenn Scherer, a contributing writer for This article has been republished with permission, original article here.