Adrien Bilal (Harvard University and CEPR) and Diego R. Känzig (Northwestern University and CEPR) will present their paper The Macroeconomic Impact of Climate Change: Global vs. Local Temperature. This paper estimates that the macroeconomic damages from climate change are six times larger than previously thought. The authors exploit natural variability in global temperature and rely on time-series variation. A 1°C increase in global temperature leads to a 12% decline in world GDP. Global temperature shocks correlate much more strongly with extreme climatic events than the country-level temperature shocks commonly used in the panel literature, explaining why the estimate is substantially larger. The authors use a reduced-form evidence to estimate structural damage functions in a standard neoclassical growth model. The results imply a Social Cost of Carbon of $1,056 per ton of carbon dioxide. A business-as-usual warming scenario leads to a present value welfare loss of 31%. Both are multiple orders of magnitude above previous estimates and imply that unilateral decarbonization policy is cost-effective for large countries such as the United States.

Join us on 17 July 2024, from 5 PM (CEST), 11 AM (ET), and 4 PM (BST) with co-authors:

Adrien Bilal
Harvard University and CEPR

Diego R. Känzig
Northwestern University and CEPR

Discussant 
Simon Dietz
London School of Economics and CEPR

The presentation will be followed by a discussion and Q&A session with the audience moderated by:
Christian Gollier
Toulouse School of Economics, EAERE, and CEPR

Register here.

For more information, check the invitation here.