Dynamics and Economic Aspects of Climate Change

Abstract: Climate change is the alteration of climate directly or indirectly caused by human activities that modify the composition of the atmosphere. Greenhouse gases (GHG), particularly CO2, are accumulating in the atmosphere, with the consequent warming. Global mean temperature has risen since preindustrial times, with most of the warming occurring in the last three decades. The consequence are increasingly frequent extreme weather events. Though economists have often disagreed about economic aspects of global warming, views as those of the Stern Review—that purports global warming as a major economic problem implying risks of disaster and demanding the use of major resources — are increasingly common. The idea that with development and technological progress total GHG emissions or at least emissions per capita would decrease has been discredited by evidence of a link between increased economic activity and greater emissions. In general, global emissions of CO2 have increased at rates correlated with the annual increase of world GDP (WGDP). Furthermore, the annual increase in atmospheric concentrations of CO2 is correlated with the growth of WGDP. Impacts of climate change and strategies to mitigate them have been often subjected to integrated assessment models (IAMs), which involve many controversial aspects. For global warming above 2 or 3 °C IAMs agree that there will be a reduction of long-term social well-being and a negative impact suffered mostly by low-income regions, but different IAMs strongly disagree on the level of human-induced damage, with estimates ranging from less than 1 % to over 10 % of WGDP. However, significant economic and technological potentials for mitigation and emissions reductions are now available. These would be larger if non-technical option