Climate Economics with Arvid Viaene
A research-focused podcast on the economics of climate change and air pollution. Episodes are released every two weeks on Tuesday at 6 am CET. Episodes will be either expert interviews or solo explorations of key issues. Hosted by Dr. Arvid Viaene, a climate economist with a PhD from the University of Chicago. He has done research on the impacts of climate change on agriculture and mortality. His research on climate-related mortality has been published in The Quarterly Journal of Economics, and he has advised the European Commission on the impacts of climate policy on firm competitiveness.
Climate Economics with Arvid Viaene
#32 Dr. Gernot Wagner — Why Tipping Points Matter in Climate Economics
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When economists model climate change, they often focus on how rising greenhouse gas emissions increase global temperatures and create economic damages. But the climate system is not always smooth or linear. Some systems may cross tipping points: thresholds beyond which change becomes abrupt, irreversible, or self-reinforcing.
In this episode, I speak with Dr. Gernot Wagner, a climate economist at Columbia Business School and faculty director of the Climate Knowledge Initiative. Gernot has written widely on climate risk, policy, and technology, including books such as Climate Shock and Geoengineering: The Gamble.
We discuss Gernot’s research on how tipping points can be incorporated into climate-economic models. These include ice sheet collapse, permafrost carbon release, Arctic sea ice loss, AMOC slowdown, and Amazon rainforest dieback.
A central result from the paper is that tipping points can raise the social cost of carbon by roughly 25% to 50%, with a large right tail: there is a meaningful chance that tipping points could double or even triple the estimated social cost of carbon.
We also discuss why tipping-point damages are uneven across regions, why some effects are difficult to model, how the literature has evolved since the paper, and why tipping points should not distract us from the “slow burn” damages of climate change such as heat, productivity losses, mortality, and morbidity.
In this episode
- What climate tipping points are and why they matter for economics
- Examples: Greenland and West Antarctic ice sheets, permafrost, Arctic sea ice, AMOC, and Amazon dieback
- How tipping points can be incorporated into integrated assessment models
- Why tipping points increase the social cost of carbon
- Why tail risks matter as much as central estimates
- Why some tipping-point impacts are highly regional
- How methane and faster warming affect tipping-point risks
- Why “slow burn” damages are still central to climate economics
If you want to understand why climate risk is not just about gradual warming, but also about uncertainty, irreversibility, and tail risks, this episode is for you.
Paper: S. Dietz, J. Rising, T. Stoerk, & G. Wagner, Economic impacts of tipping points in the climate system, Proc. Natl. Acad. Sci. U.S.A. 118 (34) e2103081118, https://doi.org/10.1073/pnas.2103081118 (2021). https://www.pnas.org/doi/10.1073/pnas.2103081118
For questions, comments or suggestions, you can contact me at arvid.viaene.ce@gmail.com