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The New Climate Economics

NEW YORK – This Friday, in its latest comprehensive assessment of the evidence on global warming, the United Nations Intergovernmental Panel on Climate Change will show that the world’s climate scientists are more certain than ever that human activity – largely combustion of fossil fuels – is causing temperatures and sea levels to rise.

In recent years, a series of extreme weather events – including Hurricane Sandy in New York and New Jersey, floods in China, and droughts in the American Midwest, Russia, and many developing countries – have caused immense damage. Last week, Mexico experienced simultaneous hurricanes in the Pacific and in the Gulf of Mexico that devastated towns and cities in their path. Climate change will be a major driver of such events, and we risk much worse.

This puts a new debate center stage: how to reconcile increased action to reduce greenhouse gas emissions with strong economic growth.

It is a debate that is already mired in controversy. As most countries have started making serious investments in renewable energy, and many are implementing carbon prices and regulations, critics complain that such policies may undermine growth. With the global economy still recovering from the 2008 financial crash, higher energy costs – not yet fully offset by greater energy efficiency – are worrying business and political leaders.