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These (cost-benefit) models balance the economic implications of mitigation and climate damages to identify the pathway of emissions reductions that will maximize total economic welfare. [38] In other words, the trade-offs between climate change impacts, adaptation, and mitigation are made explicit.
This statement summarizes the economic case for carbon pricing as follows: The most efficient approach to slowing climate change is through market-based policies. In order for the world to achieve its climatic objectives at minimum cost, a cooperative approach among nations is required – such as an international emissions trading agreement.
Mitigation costs will vary according to how and when emissions are cut. Early, well-planned action will minimize the costs. [142] Globally, the benefits of keeping warming under 2 °C exceed the costs, [285] which according to The Economist are affordable. [286] Economists estimate the cost of climate change mitigation at between 1% and 2% of GDP.
Abatement cost is the cost of reducing environmental negatives such as pollution. Marginal cost is an economic concept that measures the cost of an additional unit. The marginal abatement cost, in general, measures the cost of reducing one more unit of pollution. Marginal abatement costs are also called the "marginal cost" of reducing such ...
The Stern Review on the Economics of Climate Change is a 700-page report released for the Government of the United Kingdom on 30 October 2006 by economist Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE) and also chair of the Centre for Climate Change Economics and Policy (CCCEP) at Leeds University and LSE.
According to economic theory, a carbon price should be set equal to the SCC. In reality, carbon tax and carbon emission trading only cover a limited number of countries and sectors, which is vastly below the optimal SCC. In 2024 the social cost of carbon ranges to over $1000/tCO 2, [6] while the carbon pricing only ranges to about $160/tCO 2. [7]
Climate finance is "finance that aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts", as defined by the United Nations Framework Convention on Climate Change (UNFCCC) Standing Committee on Finance.
The economic costs of adaptation to climate change will depend on how much the climate changes. Higher levels of warming lead to considerably higher costs. Globally, adaptation is likely to cost tens or hundreds of billions of dollars annually for the next several decades.