Climate Change Economics and the Climate-Conflict Nexus: Some Takeaways for Policy-Makers

On the occasion of the 2018 Nobel Prize in Economic Sciences, which was awarded to William Nordhaus for his work on climate change economics (alongside Paul Romer for his contribution to macroeconomics), we highlight some essential findings of that research and then link them to research on climate change and human security (conflict). From this we derive some policy implications that can be drawn when linking results from integrated assessment models (climate change economics) with what we know from analyses of the climate-economy-conflict nexus.

Some takeaways

The existing scientific evidence indicates that further delays in sharply reducing GHG emissions will inflict large economic damage on future generations both in rich and poor countries and are likely to increase social conflict and violence particularly in some parts of the Global South that are already suffering from such problems today. However, drastic cuts in GHG emissions have strong distributional effects within countries, imposing higher opportunity costs on some sectors, individuals, or geographic areas, than on others. They also require painful trade-offs between reduced economic growth in the short or even medium term, which may cause severe social conflict, and avoiding large economic damage from climate change in the long-term, which may cause even worse social conflict. Such distributional problems and trade-offs are very difficult to deal with even in rich countries, as the recent “Gilet Jaune” unrest in France demonstrates. But they are probably even much more challenging in poorer countries and should be a top priority both in climate and in development policy. Scientific research could contribute to such policy efforts by coming up with quantitative assessments of the net effects of different GHG mitigation strategies both on economic welfare and social conflict. One starting point for this could be forecasting research by Hegre and colleagues. They show that broader socioeconomic development, expressed by higher growth in education and poverty alleviation, could help in offsetting most of the conflict risk in developing countries associated with reduced economic growth due to implementation of policies to curb GHG emissions.