World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data
The Costs of Mitigating Climate Change
Dennis Anderson & Matt Leach
World Economics, September 2005

The paper reviews analyses of the costs of mitigating climate change and discusses the implications for policy. The estimated effects of reducing carbon emissions by 40%–60% over the next half century range from –1.0% to 4.5% of world product, averaging 2½%. This would be small in relation to the growth of economic output over the period, which is likely to be several hundred percent higher than it is today. The main reason why the estimated effect is small is innovation: a large number of carbon-neutral technologies and practices is available or emerging that are capable of significant further development. An initiative focussed on encouraging innovation and the diffusion of new energy technologies and practices across countries would provide a new direction for international cooperation based on already significant national policies in many countries.
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