<div id="readability-page-1" class="page"><div><p>On Earth Day 2026, people need to pay attention to an alarming statistic about the damage from global warming. BloombergNEF reported that in 2024, the dollar value of global climate damages was $1.4 trillion. This is two-to-three times higher than previous forecasts generated by economics Nobel laureate William Nordhaus’ integrated assessment model, for the period 2021 through 2030.</p><p>BloombergNEF issued its report in October 2025, and not enough people are paying attention to its significance. Because damages grow exponentially, there is reason to suspect that future damages will likely to be much higher than people had anticipated. </p><h2>Ignoring The Scientific Evidence Makes No Sense</h2><p>The study of behavioral economics focuses on the psychology underlying the degree to which people make rational economic decisions. Technically, a decision is rational when it provides the best means for achieving a decision maker’s ends. For example, consider someone who is wearing a lot of clothes in hot weather, and wants to cool off. Suppose that removing some clothing would lead the person to cool off comfortably, without any detrimental side effects; and suppose that adding more clothing would make the person hotter. Then technically, removing clothing would be a rational course of action, and adding clothing would be irrational.</p><p>President Trump describes global warming as a hoax. His administration’s policies increases the incentives to develop fossil fuels and removes incentives to develop alternative energy sources such as wind power.  Is an overheated planet analogous to an overheated person? Readers might consider this question as they contemplate the degree to which U.S. climate policy is rational. </p><p>For the record, the first official scientific warning about global warming was the Charney report, issued in 1979. That report described how the future would unfold if the world continued business-as-usual behavior regarding greenhouse gas emissions. As we approach the 50-year mark since the release of the Charney report, it is easy to verify that its analysis has withstood the test of time. Atmospheric concentrations of carbon and global atmospheric temperatures are in line with the Charney report’s predictions. </p><p>Climate-related damages surged in 2024, the hottest year in recorded history, when the global temperature reached 1.6 degrees Celsius (above pre-industrial temperatures). That year, the atmospheric carbon dioxide concentration rose to 424 parts per million. Carbon dioxide concentration and atmospheric temperature were two of the key variables analyzed by Charney report.</p><p>Project 2025, has served as a blueprint for the current Trump administration’s overall policies. Project 2025 uses language such as “the Biden Administration’s climate fanaticism” (p. 60). What Project 2025 describes as fanaticism is, in fact, the implementation of policies advocated by Nordhaus and other mainstream economists. Project 2025 calls for the Biden policies to be totally reversed, with resources instead allocated to increased fossil fuel production. </p><p>The Project 2025 document provides no scientific evidence to refute mainstream climate scientists’ positions on global warming and the strong evidence supporting those positions. This is important, and careful readers of the document might wonder about the degree to which ignoring mainstream science is rational.</p><h2>How Rational Climate Policies Get Blocked</h2><p>There are two major strategies for dealing with the climate crisis we now face. Both strategies relate to money and markets. The first is to institute a global price for carbon that approximates the social cost of the emissions. The second is to invest in technologies that will remove carbon dioxide from the atmosphere and store it safely on Earth. Consider what has happened on both of these fronts as a result of actions by the Trump administration.</p><p>In 2025, the international shipping industry was on the cusp of instituting a global carbon tax. Doing so would have introduced the first uniform global price for carbon dioxide. However, the Trump administration threatened to impose sanctions on the industry if the proposal was enacted, and the decision to move forward with the proposal was put on hold.</p><p>In 2026, Microsoft announced that it has temporarily halted all new carbon removal purchase. This is highly significant as Microsoft has accounted for almost 80% of carbon removal credits. </p><p>Because participation in the market for these credits is voluntary, the carbon removal credit offset market is a poor substitute for a uniform global price for carbon dioxide emissions that is close to its social cost. Microsoft’s decision makes it clear that the voluntary carbon market has a fragile demand structure, highly dependent on one participant. </p><p>The supply side too is fragile. The Trump administration’s Energy Department has terminated about $3.7 billion of funding for carbon capture and storage projects. This withdrawal of support has led many large corporations to reduce their sustainability activities.</p><h2>Wake Up, World</h2><p>The carbon tax shipping story and the carbon dioxide removal story both made national headlines. However, the story about BloombergNEF’s announcement about climate damages received little attention by comparison and no momentum to speak of. It is time for the world to wake up to the recent data about the magnitude of climate damages and act appropriately.</p><p>Nordhaus’ integrated assessment model provides a way to analyze how best to respond to a world with higher damages than previously anticipated. One way is by increasing global investment in abatement activities — to use the language from BloombergNEF, “everything from sea walls to seed science.” </p><p>Consider the IAM’s recommendation for how much to increase investment. In 2015, the IAM’s estimate was for a recommended annual expenditure, between 2025 and 2030, of $0.23 trillion. However, in view of the higher damages being experienced, I reran the IAM with revised parameters. The revised recommended annual expenditure increased to $1.9 trillion, a huge increase. Yet, as discussed above, the Trump administration is making every effort to move policy in the opposite direction.</p><p>The IAM also generates recommended tax rates for carbon dioxide emissions. In 2015, the estimate was for a recommended tax rate, between 2025 and 2030, of $51 per metric ton. However, in view of the higher actual damages, the IAM’s recommended tax rate has increased to $190 per metric ton, an amount in line with the shipping industry’s global carbon price proposal. That proposal featured a two-tier fee structure: a base fee of $100 per ton of carbon dioxide emissions, coupled with a higher fee of $380 per ton for ships that exceed stricter emission thresholds.</p><h2>Why This Data Matters Now</h2><p>At present, the estimated price of carbon is not even half of what Nordhaus’ model called for in 2015, let alone what it calls for now to deal with the higher rates of damage. Without a change in course, climate damages are going to accelerate in the future. By 2050, damages will be more than three times greater than the estimates from 2015. </p><p>U.S. climate policy is driven by politics. Just as Americans are paying the price of tariff policies, they are paying the price of climate ones. The country still has a democracy. If Americans want a better future, those that are in denial about just how serious the impact of global warming is will have to wake up to the truth, change their beliefs about climate change, and pressure the politicians representing them to institute climate policies. They will need to do so quickly, as time is running out.</p></div></div>

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<p>The BloombergNEF reported that global climate damages reached $1.4 trillion in 2024, significantly higher than previous forecasts. This alarming statistic highlights the exponential growth of climate-related damages, particularly as 2024 was the hottest year on record. The Trump administration's policies have hindered rational climate strategies, such as implementing a global carbon price and investing in carbon removal technologies. Microsoft's halt on new carbon removal purchases and the termination of funding for carbon capture projects further exacerbate the fragile state of the carbon market. The urgency for effective climate action is more critical than ever.</p>

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The Market Impact Of $1.4 Trillion In Climate Damages Is Only Beginning