Past CO₂ emissions may drive far bigger future economic losses

A groundbreaking Stanford University study reveals that carbon dioxide emissions from decades past will continue generating economic damages far exceeding their current impact. Published in Nature, this research provides the first comprehensive dollar-value assessment of climate harm attributed to individual nations and major corporations over time.

The analysis demonstrates staggering financial consequences: U.S. emissions alone since 1990 have inflicted over $10 trillion in global economic losses. This damage extends across international borders, with developing nations bearing disproportionate costs—$330 billion in Brazil and $500 billion in India. Remarkably, nearly $3 trillion of damage from U.S. emissions affects the United States itself, while Europe has sustained $1.4 trillion in losses.

"It turns out that U.S. emissions have really hurt U.S. output," explained lead author Marshall Burke, a professor of environmental social sciences at the Stanford Doerr School of Sustainability.

While absolute damages appear largest in wealthy nations, developing countries face more severe impacts relative to their economic size. This disparity highlights the uneven global distribution of climate costs.

The study also examines corporate responsibility, focusing on Saudi Aramco, the world's largest single corporate emitter. The company's oil-related emissions from 1988 to 2015 generated $3 trillion in global damages by 2020. However, if these emissions persist in the atmosphere until century's end, damages could escalate dramatically to $64 trillion—more than a twenty-fold increase.

"As long as a ton of emitted carbon dioxide is up there, it is causing warming and that warming is causing damage," Burke noted.

Understanding Loss and Damage

The research introduces a robust framework for quantifying "loss and damage"—the unavoidable costs of climate impacts that cannot be prevented through emissions reductions or adaptation measures. This concept features prominently in international climate negotiations and legal proceedings.

"We typically think about dealing with climate change in two ways, either mitigating climate change—so, slowing and stopping climate change—or adapting to its impacts. Confronting the damage that occurs when mitigation and adaptation fall short is the third leg of the stool that we just don't talk about that much," Burke explained.

The researchers employ an innovative analogy, comparing greenhouse gas emissions to waste management. Co-author Solomon Hsiang, also a professor of environmental social sciences at the Doerr School, explains: "When we generate garbage, it's illegal to dump it wherever we want, because doing so creates a cost to others. Normally, we pay someone else to take our waste away. Our legacy of greenhouse gas emissions is similar, except we've never paid the bill and it just keeps accruing interest."

This perspective suggests that carbon removal technologies could reduce these accumulated costs. However, timing proves critical—the study calculates that if carbon dioxide remains atmospheric for 25 years before removal, half of its expected damage has already occurred.

"Our study shows that because of the compounding impacts of warming on economic growth, the time since the emissions occurred is critical for accurately accounting for the loss and damage associated with past emissions, as well as the cost-benefit analysis of potential solutions," stated co-author Noah Diffenbaugh, the William Wrigley Professor and Kimmelman Family Senior Fellow in the Doerr School of Sustainability.

Enhanced Methodology Reveals Greater Costs

This Nature publication represents a significant advancement from the researchers' 2023 preprint, with substantially higher damage estimates. The revision incorporates previously unaccounted delayed effects of warming on economic output.

"We see in the data that the effects of a really hot year can persist for a long time," Burke observed. "When you include the long-run effects, the damage estimates get bigger."

For major emitters like Saudi Aramco, incorporating these long-term effects increases damage estimates nearly five-fold, demonstrating the importance of comprehensive temporal analysis.

The methodology requires careful consideration of several factors, including appropriate discount rates for past and future damages and the allocation of responsibility between fuel producers and consumers. The researchers selected 1990 as their baseline year, coinciding with the UN's adoption of its first global climate treaty—a moment when international awareness of climate risks became formalized.

Despite their comprehensive approach, the authors acknowledge their estimates likely understate actual damages. The analysis focuses on impacts reflected in GDP but excludes other significant harms.

"We haven't accounted for impacts that aren't captured in GDP, such as loss of biodiversity and cultural homeland, and our approach also underweights some sources of climate impacts such as sea level rise and some types of extreme events," Diffenbaugh noted. "This makes our estimates conservative."

This research provides critical quantitative evidence for ongoing climate policy discussions and legal proceedings, offering unprecedented clarity on the economic consequences of historical emissions decisions.