Economics of climate change


Governments and academics are deeply divided over the economic costs and benefits of combating climate change and moving towards a low-carbon economy. The Stern Review, an influential enquiry into the issue, concluded in 2006 that fighting global warming would cost 1% of global GDP, while non-action could lead to a 20% loss of GDP in the long term. In comparison, research published in January 2009 shows that avoiding dangerous climate change could cost as little as 0.5% of global GDP.

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Financing climate change policies aimed at tackling global warming is a contentious issue, as reliable and accurate information on the costs and benefits of such measures is difficult to collect. 

Although there is now a wide consensus that the world must stop global temperatures from rising and maintain them below 2°C to escape dangerous climate impacts, calls to reserve government funds for the cause have not been universally welcomed. In particular, the recent financial meltdown is putting a strain on public finances.

Nevertheless, proponents of stringent climate policies argue that combating climate change now will come at a much lower cost than dealing with negative and even irreversible effects later on.