As a species, we still hesitate to recognize our impact on the Earth, ignoring the magnitude of damage w
cited in Costanza et al 2017). Climate change has been observed since the late 19th century, as since the
has risen by around 1.0°C, with the increase rising after 1980 (Wuebbles 2017, referred in Hsiang and Ko
significantly faster than the sea: between 1880–1900 and 1997–2017, the land averaged 1.4 ° C (2.5°F) wh
(GISTEMP Team 2018, cited by Hsiang and Kopp 2018). A warmer climate will accumulate more water vap
overall (rainfall and snowfall). Precipitation in the mid-latitude northern hemisphere has been rising since
sea level has risen by about 18–21 cm, with the growth frequency 2–2.5 times faster since about 1990 th
al. 2017, cited by Hsiang and Kopp 2018) As the CO2 concentration in the atmosphere increases, some o
producing carbonic acid and increasing ocean acidity.
Another great factor of climate change are waste emission stock like nuclear wastes, various chemicals, t
of greenhouse gasses, mainly CO2, in the atmosphere is one of the leading contributors of global warmi
production come from carbon-based fuel sources. It is a widely accepted fact that the temperature of th
maximum of 2oC to stay within normal. British economist, Nicholas Stern argued that a target of 440 pp
CO2e[1] was ideal, even though it has a 6% change of exceeding the 2oC limit (Stern 2007, cited by Cost
climatologist. James Hansen, argued that 350 ppm was the maximum accepted level, without specifying
(Hansen et al 2008, cited by Costanza et al 2017). Currently the stocks of CO2 stand at 414.7 ppm, not ju
observation, but also the highest in human history (NOAA, 2019).
But is reducing carbon emissions cost efficient?
The cost of reducing carbon emissions are not without its challenges. Programs in support for biodiesel
cost-effective to the general public but under scrutiny of economists, it shows that they can be significan
opposite also holds true, for example the Clean Power Plan, which would have reduced carbon emissions
compared to the plans already in place. Another factor is that most of the carbon emission reduction pla
do not include the dynamic consequences which, in-turn, may lead to significant long-term costs. Climat
and cost assumptions should include the dynamic factors as well. Putting a price on carbon might not se
term consideration, it needs to be incorporated in the short-term trade-offs. Economists recognise that w
rapid technological progress to combat climate change can be surprising any more. (Gillingham and Sto
Moreover, scientists fail to understand or factor the socio-economic damages which occur as a result of
biggest threat to the economics of resource management and requires focus on long-term solutions, on
development. Sustainable development is a way to deal with the growing rates of climate change and its
the scope of climate change research, the term “Damage Function" applies to translating climate into ec
generally referred to as a "dose response function" (Auffhammer 2018). Economists have come up with w
two most important ones being:
The Ricardian Cross-Sectional Approach: Mendelsohn, Nordhaus and Shaw (1994) have tried to
measure the impact of climate on farmers and their crops by estimating the profits from the yield a
other factors, (for example, farmer’s self-reported values, rainfall) some regression must be include
possible. The results vary from season to season and climate to climate.
The Panel Data Approach: Auffhammer, Ramanathan and Vincent (2006) and Deschênes and Gree
year variations in agricultural outcomes, temperature and precipitation to estimate the damage fun
regression formula regresses outcomes of interest on contemporary climate measurements (instea
averages). If the climate parameter on the right side enters the regression linearly, the predicted re
run/heat/no response to adaptation. In this simplest version of the model, econometric identificati
changes in weather and the outcome of interest.
