Fatal Calculations

How Economics has Underestimated Climate Damage & Encouraged Inaction

Economics Finance Risk Analysis Future Warming Policymaking Food & Water

By David Spratt / Alia Armistead

Conventional economic models have dangerously underestimated the true risks of climate change, encouraging delay instead of driving action. This report reveals how flawed assumptions and outdated tools are fuelling a false sense of security.

Summary

Conventional climate economics has consistently downplayed future climate damage and risk.
Cost–benefit models fail to account for tipping points, feedback loops, and unquantifiable losses.
The Integrated Assessment Models (IAMs) used in policymaking are deeply flawed and unreliable .
Economic impacts such as societal collapse, conflict, and migration cannot be meaningfully priced.
Risk analysis must prioritise extreme-case outcomes over mid-range predictions.
An emergency-level economic shift is required to avoid catastrophic climate consequences.

The failure of mainstream economic thinking to grasp the scale and urgency of the climate crisis is a critical concern. This report investigates how, at the centre of global climate policy, economic models significantly understate damages, rely on unrealistic assumptions, and ignore system dynamics like tipping points and irreversible feedbacks.

This report explains why key modelling tools—especially Integrated Assessment Models—are ill-equipped to handle existential climate risk. Their influence on the UN climate process has led to policy choices that favour short-term economic comfort over long-term survival.

The report argues that future damages from climate disruption are in many cases beyond valuation. As such, the prevailing economic logic behind delayed action is not only flawed—it is dangerous. Fatal Calculations makes the case for abandoning false precision and embracing risk management focused on worst-case scenarios. It calls for immediate, emergency-scale economic transformation to reduce the risk of societal collapse and ensure long-term human security.

TOWNSVILLE, AUSTRALIA - FEBRUARY 04: Seen is a general view of a blocked major intersection in the flooded Townsville suburb of Idalia on February 04, 2019 in Townsville, Australia. Queensland Premier Annastacia Palaszczuk has warned Townsville residents that flooding has not yet reached its peak as torrential rain continues. The continued inundation forced authorities to open the floodgates on the swollen Ross River dam on Sunday night. (Photo by Ian Hitchcock/Getty Images)

Flooded suburb of Idalia on February 04, 2019 in Townsville, Australia. Queensland. (Photo by Ian Hitchcock/Getty Images)

If damaging tipping cascades can occur and a global tipping point cannot be ruled out, then this is an existential threat to civilization. no amount of economic cost–benefit analysis is going to help us.

— Prof Tim Lenton (Lenton Et Al. 2019)

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