COP28 and the economics of climate change

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A person at a march holds a sign that reads 'Planet over Profit'

By Professor Robert Elliot, Director of Research – Department of Economics

The United Nations (UN) annual climate change conference (COP28) is coming at a time when the implications of climate change for the global economy are becoming increasingly evident after a period of floods, wildfires, and other extreme events. COP28 will once again bring together world leaders, ministers, and negotiators, to provide a way forward on how to address climate change.

COP28 is an opportunity to spell out more clearly to the watching world how countries, through cooperation at a global level, can keep the average temperature rise below (ideally well below) 2° C above pre-industrial levels. However, the timing of COP28 also coincides with a period of geopolitical instability which may divert attention away from the longer-term economic impacts of climate change. Instead, the focus may be on the immediate impacts of military conflict followed by a period of deglobalisation as leading nations begin to decouple their economies.

The current geopolitical environment has also brought energy security issues to the fore and provided a boost to the renewable energy and nuclear industries that enable countries to have a great degree of energy autonomy. Swiss Re predict that by the middle of the century, in a business-as-usual scenario, the world stands to lose around 10% of total economic value both from physical risks and transition risks.

The global concerns surrounding the impact of climate change means that any attempt to adapt to climate change, target financial flows, and develop a pathway to climate-resilient development require global cooperation and an understanding that progress will be driven not only by politics but also by economics.  The costs of adaptation and regulatory compliance need to be weighed against the costs of business-as-usual and the large degree of uncertainty that surrounds the timing and magnitude of the future damages from a warming planet. Understanding the costs of net-zero to both consumers and businesses is important if the world is to make progress at COP28.

Academics in Birmingham Business School’s Department of Economics have a wide range of projects looking at different aspects of the climate change debate, many of which will be showcased immediately after COP28 at the 1st Climate Change, Urban Challenges, Renewable Energy, and Extreme Events Conference (CRUEE) ( that will be held at the University of Birmingham’s state-of-the-art campus in Dubai on 13-14 December 2023.

Economics at Birmingham is particularly well-known for examining different aspects of extreme events and changes in climate. For example, work on floods; wildfires; hurricanes and typhoons; extreme temperatures; clean air zones; GHG emission reductions and air quality; climate change and migration; voting behaviour and climate change; climate change, exports and supply chains; green jobs and the energy transition; and electric vehicle supply chains. In a warming world, understanding the impact of extreme events and how to build resilience to future shocks is essential if we are to be able to mobilise the political and economic resources needed for the world to meet the Paris Agreement targets.

Much of the research described above that is undertaken at the University of Birmingham contributes to the broader COP28 debate. There is no doubt that emphasis will be increasingly placed on finance and the associated economics. Developing countries will need resources but also the capacity to absorb new green technologies assisted by technology transfers and skills training. The provision of finance and support on allocating and spending these funds will be crucial to ensuring the world gets the right combination of mitigation and adaptation strategies whilst addressing the distributional implications. It is therefore important to understand which policies would be most effective and how to build a global consensus on how to align the interests of both developed and developing countries.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

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