Mitigating climate change to alleviate economic inequality under the Paris Agreement

Yun Tang; Hongbo Duan; Shiyun Yu

doi:10.1016/j.isci.2022.105734

Mitigating climate change to alleviate economic inequality under the Paris Agreement

iScience. 2022 Dec 5;26(1):105734. doi: 10.1016/j.isci.2022.105734. eCollection 2023 Jan 20.

Authors

Yun Tang¹, Hongbo Duan², Shiyun Yu³

Affiliations

¹ School of Economics, Ocean University of China, Qingdao 266100, PR China.
² School of Economics and Management, University of Chinese Academy of Sciences, Beijing 100190, PR China.
³ College of Oceanic and Atmospheric Sciences, Ocean University of China, Qingdao 266100, PR China.

Abstract

Understanding the implications of global climate governance is critical for achieving sustainable economic development, given that the economic impacts of climate change and policies are disproportionately distributed across regions. We estimate the updated damage functions and construct an uncertainty analysis framework to assess whether stringent climate policies entail economic benefits in terms of growth and inequality. The findings show that although climate policies slow the pace of economic growth, the benefits of avoided damage may overweight policy costs in the long run. Moreover, pursuing the 1.5°C goal slows economic catch-up of poor countries in the short to medium term relative to 2°C, but improves global inequality in the long run. This situation may, however, change when moving to a fast-growing and fossil-fueled world, in which inequalities gradually decline but start to rise after 2065. This study highlights the importance of synergizing the stringent 1.5°C goal with economic inequality alleviation.

Keywords: Economics; Energy policy; Energy resources; Environmental policy.