Economic Impact

Download the CLIMATE SCRUTINY Guide to CC Economic Impact.

The foundation of any rigorous climate policy, in business or in government, is to understand the full loss and damage (FL&D), which includes all economic, social and environmental impacts. A headline scenario of FL&D needs to triangulate between the following types of L&D and sources of evidence.

  • Natural Resource Productivity. The way in which physical processes change with CC. Evidence from research case studies, project appraisals and evaluations, expert opinion.
  • Heat Stress and Labour Productivity. Evidence from workplace and medical research into heat and labour productivity. Recent evidence suggests this is the most important type of FL&D.
  • Damage to Assets. The impact of extreme events on physical and institution assets. Evidence from disaster response records, needs assessments, insurance and public compensation schemes.
  • Indirect Impact on Investment. The above types of FL&D reduce incomes in various ways, which leads to reduced saving and investment and so affects future growth paths. This can be analysed using the CEGIM approach, which distills the essence of more complex climate economic models into a simple and transparent spreadsheet, calibrated with data that is available in most countries.