Skip to main content
Climate
Search

Main navigation

  • Climate 101
    • What We Know
    • What Can Be Done
    • Climate Primer
  • Explore
    • Explainers
    • Ask MIT Climate
    • Podcast
    • For Educators
  • MIT Action
    • News
    • Events
    • Resources
  • Search
MIT

Main navigation

  • Climate 101
    • What We Know
    • What Can Be Done
    • Climate Primer
  • Explore
    • Explainers
    • Ask MIT Climate
    • Podcast
    • For Educators
  • MIT Action
    • News
    • Events
    • Resources
  • Search
PostFebruary 19, 2025

Projecting and reducing the global economic impacts of climate change

Photo: Los Angeles wildfires, January 2025 (Source: City of Irvine, California)
Photo Credit
Photo: Los Angeles wildfires, January 2025 (Source: City of Irvine, California)

Modeling improvements needed to provide more reliable guidance to decision-makers, finds MIT-led study 

Mark Dwortzan | MIT Center for Sustainability Science and Strategy

Amplified by climate change, January’s wildfires in Los Angeles destroyed more than 15,000 buildings and displaced more than 100,000 people. The weather forecasting service AccuWeather estimates that total economic losses incurred by the fires will exceed $250 billion. As wildfires, droughts, floods and other extreme weather events become more frequent and intense across the globe amid a warming climate, such losses are only expected to grow in coming decades. But just how much they will grow is a matter of scientific debate.

Today’s projections of the impacts of climate change on the global economy vary widely depending on the methods used to model the Earth’s interconnected physical and societal systems. In two recent studies, estimates of the global gross domestic product (GDP) loss due to the same level of global warming ranged from 3 percent to 60 percent. The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report suggests that such large discrepancies must be reconciled to provide more robust guidance for decision-makers who seek to reduce the economic and human costs of climate change. 

To that end, a team of researchers at the MIT Center for Sustainability Science and Strategy (CS3), MIT Energy Initiative (MITEI) and Electric Power Research Institute (EPRI) is working to better understand and more precisely model the pathways by which climate change impacts the economy. In a study appearing in Nature Climate Change, the team compares three common methods for estimating economic impacts of climate change: structural modeling, in which the climate change-economy relationship is specified for different impact categories ranging from temperature-related mortality to agricultural productivity; statistical modeling, in which historical data and statistical methods are used to directly estimate how the global economy evolves with climate change; and meta-analysis, which derives the climate change-economy relationship from structural and statistical estimates. 

The researchers find that overall, statistical modeling produces significantly higher global GDP loss estimates than structural modeling. Based on these results, they call for further studies to pinpoint the mechanisms that lead to this discrepancy, and to determine how to incorporate additional climate impacts, and adaptive responses, into models and analyses. These include the economic consequences of climate impacts on ecosystem services and recreation, species loss and biodiversity, crime and conflict, and mass migration. 

“There is a clear need for better understanding of the mechanisms behind widely divergent estimates of climate-driven global economic losses, and more comprehensive representation of their drivers in estimation methods,” says MIT CS3 and MITEI Principal Research Scientist Jennifer Morris, the study’s lead author. “These improvements would produce a more reliable range of estimates that decision-makers could use to guide their efforts to mitigate and adapt to climate change.”

by MIT Center for Sustainability Science and Strategy
Topics
Adaptation
Climate Modeling
Finance & Economics
Government & Policy
Weather & Natural Disasters
Drought
Flooding
Wildfires

Related Posts

PostMay 22, 2025

Study: Climate change may make it harder to reduce smog in some regions

MIT News
A modeling study shows that global warming will likely make it harder to reduce ground-level ozone, a respiratory irritant that is a key component of smog, by cutting nitrogen oxide emissions.
PostMay 22, 2025

New landfill rules were supposed to cut methane. Michigan’s still falling...

MIT Climate
A large red truck drops off trash into a pile on the South Kent County Landfill.
PodcastMay 21, 2025

The economics of clean energy

MIT Energy Initiative
PostMay 20, 2025

How to solve a bottleneck for CO2 capture and conversion

MIT News
MIT researchers added nanoscale filtering membranes to a carbon-capture system, separating the ions that carry out the capture and release steps, and enabling both steps to proceed more efficiently.

MIT Climate News in Your Inbox

 
 

MIT Groups Log In

Log In

Footer

  • About
  • Terms & Conditions
  • Privacy Policy
  • Accessibility
  • Contact
MIT Climate Project
MIT
Communicator Award Winner
Communicator Award Winner