Essay by Eric Worrall
Perhaps because there is no damage?
Climate Change Is Affecting the Economy. But Proving So Is a Challenge.
Several studies have attempted to model the effects of climate change on the economy, with varying results. But one fact remains certain: The costs of climate change will hit emerging markets and developing countries the hardest.
Article by Alice C. Hill and Priyanka Mahat
May 13, 2025 3:01 pm (EST)Alice Hill is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations. Priyanka Mahat is a research associate for climate change policy.
Estimating the economic damage from worsening weather extremes is wickedly hard. By comparison, assessing the price of cutting the pollution that causes climate change is “simple stuff” [PDF], according to William Nordhaus, who won the 2018 Nobel Prize in Economics for his climate modeling. The challenge of modelling climate loss has not kept economists from trying. Their current efforts, however, almost certainly underestimate the costs, even as emerging studies show the price is increasing. With atmospheric carbon likely at its highest level in three million years, it is important to understand the significant limitations of current damage estimates.
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One thing that models do agree upon is that the costs of climate change will hit emerging markets and developing countries the hardest. In fact, while earlier models simply relied on global averages—largely based on developed country data—to estimate damages, recent studies have used spatially disaggregated regional and developing country data that reveal disproportionately larger losses in poorer countries. Those nations are often in areas already hard hit by climate-worsened extremes, and they lack the economic means to invest in adaptation to lessen the damage.
Current economic models can inform understanding of climate change. The likely failure of those models to appreciate the magnitude of future loss, however, raises the specter of a too narrow focus on the cost of stopping the harmful pollution without properly valuing the catastrophic losses that could lie ahead.
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Read more: https://www.cfr.org/article/climate-change-affecting-economy-proving-so-challenge
Interesting, given the uncertainty, that none of the models suggest climate change will yield a net benefit, given serious studies suggest there will be tangible benefits.
The claim economic models can inform understanding of climate change seems a bit dubious, given the wild variation of estimated damage. Clearly the models are highly sensitive to initial assumptions, which strongly suggests the models are also vulnerable to errors – the slightest mistake in one of those starting assumptions amplifies into wildly varying estimates.
As for the claim developing countries are particularly vulnerable, the solution is simple – help them develop. Not that they need much help, across Africa, South America and Asia, formerly poor nations are throwing off the fog of Western do-gooder lies, and developing their own capitalist economies and fossil fuel resources as fast as they can dig new wells. They’ve seen what we have in the West, and they want some of that rich lifestyle goodness for themselves. Just getting out of their way would help.
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