800,000 Years of Climate Risk - FEDERAL RESERVE BANK of NEW YORK

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Staff Reports

800,000 Years of Climate Risk

Number 1031
September 2022

JEL classification: Q54, C14, C53

Authors: Tobias Adrian, Nina Boyarchenko, Domenico Giannone, Ananthakrishnan Prasad, Dulani Seneviratne, and Yanzhe Xiao

We use a long history of global temperature and atmospheric carbon dioxide (CO₂) concentration to estimate the conditional joint evolution of temperature and CO₂ at a millennial frequency. We document three basic facts. First, the temperature–CO₂ dynamics are non-linear, so that large deviations in either temperature or CO₂ concentrations take a long time to correct–on the scale of multiple millennia. Second, the joint dynamics of temperature and CO₂ concentrations exhibit multimodality around historical turning points in temperature and concentration cycles, so that prior to the start of cooling periods, there is a noticeable probability that temperature and CO₂ concentrations may continue to increase. Finally, evaluating the future evolution of temperature and CO₂ concentration conditional on alternative scenarios realizing, we document that, even conditional on the net-zero 2050 scenario, there remains a significant risk of elevated temperatures for at least a further five millennia.

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Author Disclosure Statement(s)

Tobias Adrian
I declare that I have no relevant or material financial interests that relate to the research described in this paper. The views expressed in this paper are my own, and do not necessarily reflect the views of the IMF, its management, or its Board.

Nina Boyarchenko
The author declares that she has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.

Domenico Giannone
Domenico Giannone declares that he has no relevant or material financial interests that relate to the research described in this paper.

Ananthakrishnan Prasad
Ananthakrishnan Prasad declares that he has no relevant or material financial interests that relate to the research described in this paper.

Dulani Seneviratne
Dulani Seneviratne declares that she has no relevant or material financial interests that relate to the research described in this paper.

Yanzhe Xiao
Yanzhe Xiao declares that she has no relevant or material financial interests that relate to the research described in this paper.

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