New analyses by climate scientists, financial experts and international institutions warn that widely used economic models are seriously underestimating the scale of risks posed by climate change and nature loss — with potential consequences for global growth, financial stability and livelihoods. Traditional frameworks often treat climate change as a marginal shock rather than a systemic threat, ignoring the growing frequency of extreme weather, compounding shocks and tipping points that could trigger cascading economic disruptions.
A recent report by Green Futures Solutions and Carbon Tracker, drawing on expert input from climate scientists, concludes that current models do not capture “cascading failures, threshold effects and compounding shocks” that define real-world climate risk, particularly as warming exceeds 2°C. These limitations could mask the true costs of disasters such as floods, droughts and heatwaves, leading policymakers and investors to underprice risk and delay action.
Warnings from major media and scientific analyses highlight that governments, regulators and central banks relying on these models may be lulled into complacency, with estimates that overlook severe impacts on GDP growth, infrastructure and socio-economic systems. Experts call for re-evaluating modelling approaches to better integrate physical climate science and nature-related risk into economic decision-making, stressing that failing to do so could exacerbate vulnerabilities in an already fragile global economy. News as reported
