“For some time now it has been clear that the effects of climate change are appearing faster than scientists anticipated. Now it turns out that there is another form of underestimation as bad or worse than the scientific one: the underestimating by economists of the costs.
The result of this failure by economists is that world leaders understand neither the magnitude of the risks to lives and livelihoods, nor the urgency of action. How and why this has occurred is explained in a recent report by scientists and economists at the London School of Economics and Political Science, the Potsdam Institute for Climate Impact Research and the Earth Institute at Columbia University.
One reason is obvious: Since climate scientists have been underestimating the rate of climate change and the severity of its effects, then economists will necessarily underestimate their costs.
But it’s worse than that. A set of assumptions and practices in economics has led economists both to underestimate the economic impact of many climate risks and to miss some of them entirely. That is a problem because, as the report notes, these “missing risks” could have “drastic and potentially catastrophic impacts on citizens, communities and companies.”