Climate change economics: Summary report

29 November 2023

In March 2023, under the lead of Lord Nicholas Stern FRS, the Royal Society brought together leading international experts from the physical sciences, economics, and other social sciences to discuss how to improve the understanding of economic consequences of climate change. The findings of the two-day conference have been summarised in a short report, which outlines the key actions and research priorities needed to improve approaches to climate economics and increase climate action.

What is climate change economics?

Economic analysis and modelling are used to quantify potential changes in the economy, natural environment, and/or other social systems and to understand decisions and choices. Economists can also use analysis and models to estimate the economic impacts of climate change, due to, for example, increased temperatures and extreme events. 

However, most current approaches to economic assessments of impacts of climate change do not reflect the severity of consequences that are suggested by the latest physical climate science and evidence on impacts, due to a disconnect between the economics and physical sciences disciplines.

What could be done to improve climate change economics? 

Attendees discussed key actions and research priorities that could improve understanding of the economics of climate change.

Key actions included: enhanced interdisciplinary collaboration between economists and physical scientists, responding to information needs of decision-makers; disaggregating data and integrating local information in economic assessments, and; integrating nature and health into economic assessments.

Research priorities included: integrating extreme events and other climate-induced hazards in economic assessments; understanding the impacts of Earth system tipping points and non-linear processes, and integrating these into economic assessments, and; accounting for adaptation in economic assessments of climate change.

COP28 Event: Better understanding economic impacts of climate change

Building on this report, the Royal Society and International Science Council co-hosted an official United Nations Framework Convention on Climate Change (UNFCCC) side event at COP28 in the United Arab Emirates. Read about the event and watch the event recording.