Economic consequences of (in)action on climate change

As focus on the impacts of climate change have intensified, research and data around the economic consequences of (in)action has grown.

Economic consequences for Christchurch Ratepayers of building an airport at Tarras

This paper, by Prof. Ilan Noy, considers the likely economic impacts of the new airport at Tarras on the ratepayers of Christchurch City Council (75% shareholder in Christchurch International Airport LImited). Prof. Noy concludes that whether the proposed airport succeeds commercially or not, it will have a significant negative impact on the people of Christchurch.

Noy, I. Canterbury ratepayers risk paying the price twice if Tarras airport takes off. The Conversation, 9 September 2022. (Link)

Economic consequences of inaction (or inadequate action) on climate change

Clearly, inaction on climate change will lead to significant economic consequences, and will be much more costly than early action/mitigation.

Ministry for the Environment / The Treasury. (2023). Ngā Kōrero Āhuarangi Me Te Ōhanga: Climate Economic and Fiscal Assessment 2023. (Link)

This report brings together information on the economic and fiscal implications of climate change and New Zealand’s response to it. The costs of climate change will be large and felt unevenly across different sectors and groups of society. The choices made by governments, businesses and households, domestically and internationally, will all influence how the impacts of climate change play out. The purpose of Ngā Kōrero Āhuarangi me te Ōhanga – Climate Economic and Fiscal Assessment is to help decision-makers across the public and private sectors identify and manage the risks and opportunities of physical climate change and New Zealand’s transition to a low-emissions and climate-resilient future.

There is also a useful summary of this report in the following Newsroom article: Climate inaction likely to cost billions, Newsroom, 11th April 2023

Kikstra, J.S., Waidelich, P., Rising, J., Yumashev, D., Hope, C. and Brierley, C.M. (2021). The social cost of carbon dioxide under climate-economy feedbacks and temperature variability, Environ. Res. Lett. 16 094037. (Link)
Batten, S. (2018). Climate change and the macroeconomy: A critical review. Bank of England Working Paper No. 706. doi.org/10.2139/ssrn.3104554
Bodeker, G., Cullen, N., Katurji, M., McDonald, A., Morgenstern, O., Noone, D., Renwick, J., Revell, L., & Tait, A. (2022). Aotearoa New Zealand Climate Change Projections Guidance: Interpreting the latest IPCC WG1 report findings (Prepared for the Ministry for the Environment CR 501). (Link)
Clark, A., Mullan, B., & Porteous, A. (2011). Scenarios of Regional Drought under Climate Change (Prepared for Ministry of Agriculture and Forestry). (Link)
Frame, D., Rosier, S., Carey-Smith, T., Harrington, L., Dean, S., & Noy, I. (2018). Estimating financial costs of climate change in New Zealand – An estimate of climate change-related weather event costs. New Zealand Climate Change Research Institute and NIWA. (Link)
Frame, D. J., Rosier, S. M., Noy, I., Harrington, L. J., Carey-Smith, T., Sparrow, S. N., Stone, D. A., & Dean, S. M. (2020). Climate change attribution and the economic costs of extreme weather events: A study on damages from extreme rainfall and drought. Climatic Change, 162(2), 781–797. doi.org/10.1007/s10584-020-02729-y
IAG. (2022). Adapting to Climate Change: Climate change survey results 2018-2022. (Link)
Insurance Council of New Zealand. (n.d.). Cost of natural disasters. Retrieved from ICNZ website 27 January 2023, (Link)
Kamber, G., McDonald, C., & Price, G. (2013). Drying out: Investigating the economic effects of drought in New Zealand (Reserve Bank of New Zealand Analytical Note Series). Reserve Bank of New Zealand. (Link)
Minister of Agriculture. (2009). Drought costs NZ $2.8 billion. The Beehive. (Link)
Ministry for the Environment. (2022d). New Zealand’s projected greenhouse gas emissions to 2050. (Link)
Royal Society Te Apārangi. (2017). Impacts of Climate Change for New Zealand Evidence Update Human Health Impacts of Climate Change for New Zealand [Evidence Summary]. (Link)
Salinger, M. J., & Porteous, A. S. (2014). Weather & climate: Journal of the meteorological society of New Zealand (Inc.). Weather and Climate, 34, 2–19. (Link)
Storey, B., Owen, S., Noy, I., & Zammit, C. (2020). Insurance Retreat: Sea level rise and the withdrawal of residential insurance in Aotearoa New Zealand [Report for the Deep South National Science Challenge]. Deep South Challenge. (Link)
World Health Organization. (2011). Health in the green economy: Health co-benefits of climate change mitigation – housing sector. World Health Organization. (Link)
Ministry for the Environment. (2017). New Zealand’s changing climate and oceans: The impact of human activity and implications for the future. (Link)
New Zealand Productivity Commission. (2018). New Zealand’s low-emission pathways: The transition to a low-emission, climate-resilient economy. (Link)
Royal Society Te Apārangi. (2017). Climate change and human health in New Zealand: Impacts and opportunities. (Link)
Baisa, B., & Ludbrook, A. (2015). Economic impacts of climate change in New Zealand: A computable general equilibrium assessment. New Zealand Economic Papers, 49(3), 231-255.
New Zealand Climate Change Centre. (2017). Economic impacts of climate change on New Zealand. (Link)
Ministry for Primary Industries. (2018). Climate change and New Zealand’s agricultural sector: Economic analysis of mitigation options. (Link)
New Zealand Climate Change Centre. (2018). Adaptation to climate change in New Zealand: Implications for freshwater and marine resources. (Link)
Bealing, B., Mfumbilwa, D., & Brown, P. (2020). Assessing the potential for climate change mitigation in New Zealand agriculture. Agricultural Systems, 179, 102761.
World Bank. (2016). Shock Waves: Managing the Impacts of Climate Change on Poverty. (Link) Climate change is expected to reduce global GDP by 3% by the end of the century.
Stern, N. (2006). The economics of climate change: The Stern Review. Cambridge University Press. (Link)
Anthoff, D., Hahn, R. W., & Moore, F. C. (2020). The social cost of carbon: A global imperative. Climate Change Economics, 11(02), 2040007. (Link)
Bataille, C., & Waisman, H. (2017). The costs of delaying climate action. Climate Policy, 17(sup1), S23-S37.
Kemp, L., Xu, C., Depledge, J., Gibbins, G., Kohler, T.A., Rockström, J., Scheffer, M., Schellnhuber, H.J., Steffen, W. and Lenton, T.M. (2022). Climate Endgame: Exploring catastrophic climate change scenarios. (Link)
Sha Zhou, Global concurrent climate extremes exacerbated by anthropogenic climate change, Science Advances (2023). DOI: 10.1126/sciadv.abo1638
Podesta, J. The Climate Crisis, Migration and Refugees. Brookings Blum Roundtable. (2019). Read it here.

A selection of relevant media coverage around the economic impacts of climate change

The following articles include reference to studies/research and/or significant statements made by experts in relation to the socio and economic impacts of climate change.

You can’t keep coal and petrol cheaper and also stop climate change, commission warns Government. Stuff (13 April 2023). Read it here.
Climate inaction likely to cost billions – Treasury. Newsroom (11 April 2023). Read it here.
Climate change: NZ could face $24 billion bill to hit 2030 international Paris Agreement targets in carbon credits, officials warn. New Zealand Herald (11 April 2023). Read it here.
Treasury warns of skyrocketing bills if carbon price used to cut emissions. NZ Herald (3 April 2023). Read it here.
Warning consumers may be saddled with costs of weather damage to powerlines. RNZ (13 March 2023). Read it here.
Failing to take decisive climate action could shrink economy by $4.4 billion – report. RNZ (7 March 2023). Read it here.
New Zealand Faces a Future of Flood and Fire. Wired Magazine (17 February 2023). Read it here.
Climate change tops agenda of New Zealand insurance companies. RNZ (9 November 2022). Read it here.
Dozens of communities at serious flood risk and unprepared – report. RNZ (2 November 2022). Read it here.
IAG reveals rising property claims amid climate change inaction. Insurance Business (19 October 2022). Read it here.
The cost of riding more marine heatwaves. RNZ (19 October 2022). Read it here.
New Zealand farmers may pay for greenhouse gas emissions under world-first plans. The Guardian (11 Oct 2022). Read it here.
Climate change: Extreme weather-related insurance claims climb as climate change bites. Newshub (14 September 2022). Read it here.
IPCC report: this decade is critical for adapting to inevitable climate change impacts and rising costs. The Conversation (1 March 2022). Read it here.
New Zealand passes climate change disclosure laws for financial firms in world first. Reuters (21 October 2021). Read it here.
Climate impact of a transatlantic flight could cost global economy $3,000. The Guardian (6th September 2021). Read it here.
A land divided by climate extremes: what the IPCC report says about New Zealand. The Guardian (10 August 2021). Read it here.
Thousands of coastal NZ homes at risk amid ‘baked in’ climate change impacts. 1News (1 July 2021). Read it here.
Fighting Climate Change Is The Cheapest Option We Have Left, Modelling Shows. Science Alert (31 January 2020). Read it here.

Access research topics here:

Back to Research Index home page (click here)
The big picture – the challenge of climate change and aviation emissions (click here)
Aotearoa’s tourism sector grapples with sustainability (click here)
The aviation industry’s biggest challenge (click here)
“Low carbon aviation”: aviation efficiency and technology myths (click here)
Aviation: moral arguments and climate equity (click here)
Policy considerations to reduce carbon emissions (click here)
Infrastructure trajectories with positive long term outcomes (click here)
Behavioural and attitudinal change to reduce emissions (click here)
Economic consequences of (in)action on climate change (click here)

Suggest amendments

If you believe anything needs amending, updating or adding in to the index, please email us here.