Towards comprehensive economic assessments of climate change impacts

This paper reviews the key strengths and limitations of widely used economic modelling approaches for assessing climate change impacts. It states that robust and comprehensive economic assessments of climate change impacts are essential for effective mitigation and adaptation policy. Findings suggest none of the modelling approaches can comprehensively assess both direct and indirect impacts of climate change, particularly those caused by climate extremes, across spatiotemporal scales.

Current modelling approaches remain limited in their ability to provide comprehensive assessments across hazards, sectors, and spatiotemporal scales, particularly for climate extremes. Addressing these limitations will require further development and integration of complementary modelling approaches, alongside improved empirical foundations of structural models and higher resolution socioeconomic data. The paper recommends that future research should focus on: (i) better quantifying the persistence of climate change impacts on economic output, (ii) integrating often-omitted climate hazards, (iii) improving the representation of interactions among environmental, social, economic, and financial systems, and (iv) advancing cross-sectoral adaptation modelling across scales. The authors propose a modular, multi-scale integration of complementary modelling approaches that can enable more comprehensive assessments of socioeconomic impacts from local to global scales and improve the representation of persistent climate impacts on socioeconomic development. The proposed framework can support more robust evaluation of mitigation and adaptation policies and better guide decision-making.