The Economics of Climate Change

Abstract

This study aims to provide a comprehensive review of key issues related to climate change to economists. For this purpose, we first discuss the established scientific facts of climate change and then discuss their implications to the economy and the field of economics. We start with explaining scientific consensus on climate change, types of climate risks and measures to mitigate them, need for international cooperation and the current state of South Korea. We then elaborate on economic perspectives of climate change and highlights the critical roles of economic research in this subject. In particular, we cover key discussions on economic modeling such as integrated assessment model (IAM), carbon pricing of carbon tax and cap & trade, climate finance, climate stress test, and green new deal. After reviewing key issues, we call for prompt attention from economists and policymakers to address since South Korea is facing relatively higher transition risks to low carbon economy.