Economic impact of climate change: review of assessment methodologies, results and limits. DG Tresor Working Papers, No. 2020/4 - July 2020

Scientific consensus, including the Intergovernmental Panel on Climate Change (IPCC), is well established on the importance of climate change associated with increased anthropogenic greenhouse gas emissions. However, evaluating the economic impacts of these climate changes faces practical and theoretical difficulties. This work offers a review and analysis of the existing literature on the quantification and qualification of the impacts of climate change on economic activity. Historical data linking economic activity and climatic conditions are scarce and imprecise, while the multiplicity of possible effects and feedbacks between economic and social effects in different sectors and countries make any precise quantification exercise precarious. The available assessments agree, however, with different estimation methods, that the impact of climate change on world GDP would be significantly negative, and distributed unevenly among the different regions of the world. This study finally shows to what extent the macroeconomic approach can be supplemented by sectoral and socio-economic approaches by allowing a more precise understanding of the mechanisms underlying the aggregated dynamics. (authors)