conveyed to fossil‐fuel dependent countries through many intertwined channels of impacts, such as disruptive clean technologies, policies to address environmental problems, and shifts in public sentiments.

Innovation and green growth. The projected negative impacts of climate change and the need to transition towards a low carbon economy also serve as an important stimulus for innovation and economic growth (Gruebler et al., 2002). Investment in R&D on low‐carbon technologies is an important element of climate mitigation efforts and has already generated significant innovation in recent decades. Key elements of a growth agenda that holds the prospect of delivering economic growth, development while meeting climate objectives would include the following (The New Climate Economy, 2018): clean energy systems; smarter urban development; sustainable land use; wise water management; and a circular economy.

# _Economic growth_

There is large uncertainty and disagreement on the economic costs of climate change. One of the main tools to assess the economic cost of climate change is Integrated Assessment models (IAMs). They seek to estimate the potential economic losses due to climate change as well as the impact of mitigation measures on GDP. For example using an IAM, Nordhaus (2017) projects that by 2100, ..”the damages are 2.1% of global income at a 3°C warming, and 8.5% of income at a 6°C warming.” While IAMs tend to find small impacts on GDP, other approaches such as projections based on the aggregation of micro‐evidence on the impact of climate change have generated more pessimistic results. For example Hsiang et al (2017) estimate that for the United States, “..the very likely (5th to 95th percentile) range of losses at 1.5°C of warming is −0.1 to 1.7% GDP, at 4°C of warming is 1.5 to 5.6% GDP, and at 8°C warming is 6.4 to 15.7% GDP annually.” Economic losses arising from the implementation of climate mitigation measures needed to provide a two‐thirds (66 percent) chance of achieving the 2 percent goal are estimated at between 2.9 and 11.4 percent of consumption by 2100 (NGFS 2019a).

There is, however, increasing recognition that existing models may significantly underestimate the economic impact of climate change and overestimate the cost of mitigation measures (Stern, 2016). In particular, most current models fail to consider the catastrophic and irreversible impacts of unmitigated climate‐change which could be triggered by the crossing of global and local tipping points (Box 1). The mounting evidence on the impact of climate change on factors of production is either not or only inadequately included in IAMs through damage functions. Therefore, IAMs are not able to capture direct economic growth impacts of climate change. Similarly, most IAMs do not account for the distributional impacts of climate change and their potentially severe consequences in terms of migration and conflict. There is also considerable debate on the appropriate discount rate, where higher discount rates give less weight to the welfare of future generations. In addition, accumulating micro‐evidence provides a better understanding of the impacts of climate change on productivity. For example, natural hazards and higher temperature have a negative impact on children’s physical and cognitive development (through undernutrition and stress) and educational achievement (because learning is more difficult in high temperatures and because children tend to drop out of schools in disaster aftermaths and in response to reduced agricultural yields). There is also a direct link between temperature and outdoor labor productivity (e.g., for agriculture or the construction industry) (Hallegatte et al., 2016).

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