TY  - JOUR
A1  - Willner, Sven N.
A1  - Glanemann, Nicole
A1  - Levermann, Anders
T1  - Investment incentive reduced by climate damages can be restored by optimal policy
T2  - Nature Communications
N2  - Increasing greenhouse gas emissions are likely to impact not only natural systems but economies worldwide. If these impacts alter future economic development, the financial losses will be significantly higher than the mere direct damages. So far, potentially aggravating investment responses were considered negligible. Here we consistently incorporate an empirically derived temperature-growth relation into the simple integrated assessment model DICE. In this framework we show that, if in the next eight decades varying temperatures impact economic growth as has been observed in the past three decades, income is reduced by similar to 20% compared to an economy unaffected by climate change. Hereof similar to 40% are losses due to growth effects of which similar to 50% result from reduced incentive to invest. This additional income loss arises from a reduced incentive for future investment in anticipation of a reduced return and not from an explicit climate protection policy. Under economically optimal climate-change mitigation, however, optimal investment would only be reduced marginally as mitigation efforts keep returns high.
Y1  - 2021
UR  - https://publishup.uni-potsdam.de/frontdoor/index/index/docId/62595
SN  - 2041-1723
VL  - 12
IS  - 1
PB  - Nature Publishing Group UK
CY  - London
ER  -