The Economics of Ecology

August 2020

Combatting climate change is not only potentially essential to human survival. According to a study by the Potsdam Institute for Climate Impact Research (PIK), it makes just as much economic sense.

The institute ran a computer simulation based on a model by US Nobel Prize winner William Nordhaus to compare the costs that would result from continued extreme weather phenomena and the attendant loss in productivity with the costs of reducing greenhouse gas emissions.

The scientists found that the most economically advantageous results would come from adhering to the already agreed-upon climate protection goals.

“We ran a lot of fundamental tests on our computers,” said PIK scientist Anders Levermann. “And we determined that limiting the global rise in temperatures to two degrees, as based on science and as agreed during the political process on the road to the 2015 Paris Agreement is in fact economically optimal. Science, political and business are all pointing in one direction: zero emissions by 2050.”

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