Short answers, pulled from the story.
Economic analysis of climate change uses economic tools and models to calculate the scale and distribution of damages caused by climate change, and to evaluate the costs and benefits of mitigation and adaptation policies. It covers global aggregate costs, sectoral and regional costs, and the social cost of carbon, which estimates projected impacts per additional metric tonne of carbon emissions.
The temperature rise between 1960 and 2019 cut current GDP per capita by 18%. One study that examined 120 years of data found that climate change has already reduced welfare by 29%, with further temperature rise projected to bring that figure to 47%. A rise of one degree in global temperature is estimated to reduce global GDP by 12%.
The 2022 IPCC report found that with high warming of around four degrees Celsius and low adaptation, annual global GDP could be reduced by 10-23% by 2100. A 2025 study incorporating trade linkages raised damage estimates to as high as 40% of global output under a very high emissions scenario. One 2020 study put extra economic losses from current commitment levels at between 127 and 616 trillion dollars through to 2100, compared to limiting warming to 1.5 or 2 degrees Celsius.
A 2024 study estimated that keeping warming below 2 degrees Celsius may cost about 1% of world GDP per year. Economists broadly estimate the incremental cost of climate change mitigation at less than 1% of GDP. A 2018 study found that complying with the Paris Agreement two-degree target could yield global economic gains of around 17 trillion dollars per year up to 2100 compared to a very high emissions scenario.
Across all developing countries, adaptation costs have been estimated at about US$215 billion per year up to 2030, with higher costs expected after that period.
The choice of discount rate has a large effect on the result of any climate change cost analysis. William Nordhaus uses a descriptive approach with a market-based discount rate around an average of 4%, which makes future damages appear smaller relative to present costs. Nicholas Stern applies a near-zero rate of 0.1%, based on the ethical principle that future generations deserve equal weight, which leads to much stronger arguments for near-term mitigation action. There is still no consensus on the appropriate long-run rate.