Study overestimating economic impact of climate change retracted, though central banks already used it

The scientific journal Nature retracted an influential paper that overestimated the economic toll of climate change – but not until after central banks around the world had used it to create risk management scenarios. 

The three scientists who worked on the study on Wednesday cited “substantial” issues with the paper, which was originally published in Nature in April 2024.

The article estimated a massive 62% drop in worldwide economic output by 2100 if carbon emissions continue unabated.

But earlier this year, a Nature article by a separate team of economists noted that the climate study’s findings were largely skewed by problems with the data for just one country, Uzbekistan.

If numbers for the Central Asian nation were excluded from the data set, instead of a 62% decline in economic output, there would be a 23% drop – still a big blow, but not nearly as catastrophic as initially suggested.

The faulty number – which was roughly three times typical estimates – quickly made headlines and was cited by policymakers around the world, including the World Bank and the Organization for Economic Co-operation and Development.

It was also used by the Network for Greening the Financial System last year as it updated its scenarios modeling the expected economic impact of climate change.

NGFS is a global network of central banks and financial supervisors with more than 150 members across nearly 90 countries, including the People’s Bank of China, the European Central Bank, the Bank of England – and, until earlier this year, the Federal Reserve.

“The NGFS welcomes the academic debate and looks forward to new contributions toward a better understanding of the micro and macroeconomic impact of climate change,” the organization said in a Wednesday statement.

“The NGFS will keep monitoring developments in this critical area of research and an updated methodology will be used for the next iteration of long-term scenarios, to be published end of 2026.” 

Over the summer, the climate study’s authors – Maximilian Kotz, Anders Levermann and Leonie Wenz of the Potsdam Institute in Germany – reviewed and amended the paper in light of the critical findings.

But they later acknowledged that their errors were “too substantial for a correction,” leading to the retraction this week.

The authors plan to revise and resubmit the paper, according to Nature.

Kotz, the lead author of the paper, told Bloomberg there’s still data pointing to “very substantial impacts of climate change on the economy,” which justifies a “quite ambitious climate policy.”

It’s “important to remember what the broader field looks like already,” and that other studies are not arriving at “wildly different conclusions,” he said.

Wenz added that “there are more and more studies using different data and different methodological approaches that actually find pretty high economic damages and a very strong case for climate change mitigation.”