ABSTRACT
Climate crisis economics requires us to look towards distant horizons to try to grapple with an unprecedented global problem of gargantuan scope. Yet dealing with the climate crisis requires us to extend our economic and societal horizons beyond the individual, often ill-informed short-term decisions to encompass consideration of the common good and to extend our empathetic horizons to communities and families far removed from our own experience in distance, culture, and practice. The chapter argues that the dominant model used to forecast the economic impact of climate change has undermined our climate goals and contributed to the failure of policymakers to respond with sufficient urgency to the climate crisis that draws closer every day. The maximal climate change fat tail risk is of a different magnitude than normal economic or financial fat tail risks because the ‘extreme downside is nonnegligible. Climate crisis economics narratives and scenarios should include low-probability, high-risk events in their models.
