Climate change 3/3: Is the current path the right one?

In the final article on climate change, we will focus on the economic rationale for investments related to climate change. Opponents of sweeping climate measures argue that decarbonisation is costly and curbs growth. Supporters, by contrast, argue that inaction would be far more costly – it is just that these costs are not immediately visible; they will emerge in future damage and can currently be seen mainly in externalities. Economic studies and models exist that seek to quantify how much climate change will cost if we do nothing, but precise quantification is virtually impossible.

The enormous cost of inaction vs. the cost of transition

For example, the well-known Stern Review estimated as early as 2006 that failure to take action could cost the world more than 5 % of GDP annually (up to 20 % of GDP annually in a pessimistic scenario), while the cost of reducing emissions was estimated at around 1 % of GDP annually. More recent analyses using macroeconomic models reach similar conclusions. For example, research by the University of Cambridge in cooperation with BCG (2025) states that allowing warming to rise to around 3 °C by 2100 would reduce cumulative global GDP by 15–34 % (compared with a scenario in which warming is limited). Conversely, investments of approximately 1–2 % of GDP in mitigation and adaptation could keep warming at around 2 °C and limit economic damage to "only" 2–4 % of GDP [1]. In other words, every crown invested in time will pay back many times over in avoided damage, although some damage will no longer be preventable.