The Baseline Scenario and Current Scenario in En-ROADS now include the economic impact of climate change, known as the economic damage function. The default damage function in En-ROADS is derived from the study by Burke et al. (2018).
Estimates by economists of the expected economic damage from climate change vary widely. From surveying the research, we identified four sources that seemed credible and covered a range of damage function estimates:
Burke et al. (2018)
Burke et al. (2015)
Dietz and Stern (2015)
Howard and Sterner (2017)
We selected the Burke et al. (2018) study as a reasonable damage function to include in the En-ROADS Baseline because it is the middle of the range of these sources, providing a conservative estimate of damage. The “Reduction in GDP vs. Temperature” graph under Graphs > Population & GDP compares these different damage functions. The Burke et al. (2018) function is in red. (Note that this graph is different from other graphs in En-ROADS, as temperature is along the x-axis, rather than time.)
To derive a mathematical function for input into En-ROADS, we digitized the results of the Burke et al. (2018) study and formulated a function that had the best statistical fit to the data.
For the Current Scenario, En-ROADS includes the option to select a different damage function, create a custom one, or turn off the damage function entirely. These options are located under Simulation > Assumptions > Economy: Economic impact of climate change. Note that changes made in the Assumptions menu in En-ROADS only affect the Current Scenario, not the Baseline.