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Pathways toward limiting global warming to well below 2 ∘C, as used by the IPCC in the Fifth Assessment Report, do not consider the climate impacts already occurring below 2 ∘C. Here we show that accounting for such damages significantly increases the near-term ambition of transformation pathways. We use econometric estimates of climate damages on GDP growth and explicitly model the uncertainty in the persistence time of damages. The Integrated Assessment Model we use includes the climate system and mitigation technology detail required to derive near-term policies. We find an optimal carbon price of $115 per tonne of CO2 in 2030. The long-term persistence of damages, while highly uncertain, is a main driver of the near-term carbon price. Accounting for damages on economic growth increases the gap between the currently pledged nationally determined contributions and the welfare-optimal 2030 emissions by two thirds, compared to pathways considering the 2 ∘C limit only.
The most complex but potentially most severe impacts of climate change are caused by extreme weather events. In a globally connected economy, damages can cause remote perturbations and cascading consequences-a ripple effect along supply chains. Here we show an economic ripple resonance that amplifies losses when consecutive or overlapping weather extremes and their repercussions interact. This amounts to an average amplification of 21% for climate-induced heat stress, river floods, and tropical cyclones. Modeling the temporal evolution of 1.8 million trade relations between >7000 regional economic sectors, we find that the regional responses to future extremes are strongly heterogeneous also in their resonance behavior. The induced effect on welfare varies between gains due to increased demand in some regions and losses due to demand or supply shortages in others. Within the current global supply network, the ripple resonance effect of extreme weather is strongest in high-income economies-an important effect to consider when evaluating past and future economic climate impacts.