Later this month, policymakers from around the world will gather in Paris for a long-anticipated meeting to negotiate a new agreement addressing global climate change. The popular discourse and large amount of media coverage around this event suggest there is a lot at stake, and a commonly heard view is that these negotiations could be one of our last real chances to save the planet from substantial harm.
Unfortunately, things may be even more dire than previously estimated, at least from an economic perspective. When policymakers consider the economic damages caused by a warming planet, they often cite estimates that an increase of 4 degrees Celsius by 2100 will cost the world 4 percent of its gross domestic product (GDP). But existing estimates of the potential economic damages from climate change might understate damages by a factor of five or more.