The economic effects of climate change will depend on the extent of its physical effects. Those effects are highly uncertain. The Congressional Budget Office estimates that by 2100, there is a 5 percent chance that average global temperatures will be more than 4 degrees Celsius (4°C) warmer than they were in the latter half of the 19th century and an equal chance that they will have risen by less than 2°C. In the United States, sea levels have a 5 percent chance of rising by about 4 feet or more by 2100 and an equal chance of rising by about 2 feet or less. Damage from natural disasters is also expected to increase.

The uncertainty of climate change’s physical effects implies a wide range of possible economic consequences, ranging from benign to catastrophic. In this report, CBO focuses, where possible, on the 5th and 95th percentiles of the distributions of potential outcomes. The report examines the possible economic effects of climate change on gross domestic product (GDP), real estate markets, and other areas that influence the economy and the federal budget.

• Effect on GDP. In CBO’s estimation, there is a 5 percent chance that GDP will be at least 21 percent lower in 2100 than it would have been if temperatures remained stable after 2024 and an equal chance that GDP will be at least 6 percent higher. In CBO’s central estimate, GDP would be 4 percent lower than if temperatures remained unchanged.
• Effects on Real Estate Markets. CBO estimates that with roughly 4 feet of sea-level rise, recurring flooding would cause the loss of residential property currently worth $930 billion—roughly 2 percent of the total value. A rise of about 2 feet would cause losses of $250 billion. Those losses would mostly be borne by property owners, mortgage lenders, insurance companies, and the federal government.
• Other Consequences. Climate change will raise mortality rates and rates of illness, especially if increases in temperature are large, though adaptations will mitigate those effects. It will also harm ecosystems that provide food, clean air and water, medicines, and other useful products. Some effects of climate change will increase immigration to the United States and raise defense costs. Hotter temperatures and more intense natural disasters will disproportionately affect low-income households, minority communities, and residents of the Southeast.

The effects of climate change will be more severe if components of the climate system reach certain critical thresholds, sometimes called tipping points. Crossing those thresholds would accelerate greenhouse gas emissions, cause major ice sheets to melt completely, or shift ocean circulation and weather patterns. The temperature changes required to cross those thresholds, the breadth and severity of the effects of crossing them, and the time frames over which those effects would unfold are subject to great uncertainty because they are unprecedented in recorded history.

The Distribution of Possible Changes to Real GDP in 2100 From Climate Change

Probability