Second, GDP is not a direct measure of welfare and therefore does not capture many economically relevant impacts of climate, such as the destruction of infrastructure, the creation of new goods, or innovation.
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Further, because these studies mostly consider only temperature variation, they do not include effects of climate change unrelated to inter-annual variation in temperature, such as sea-level rise, CO2 fertilization, ocean acidification, or changing rainfall patterns.
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It is important to interpret these values in the context of the substantial uncertainty that underlies them and to understand these estimates as almost certainly a lower bound on total climate change costs.
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In particular, climate change impacts may have particular implications for certain categories of Federal spending such as disaster relief or medical expenditures due to climate-induced declines in individuals’ health. These are not captured here, but work to assess these potential risks is proceeding in a complementary workstream at OMB.
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One challenge of relying on the current literature for this application is that most estimates of marginal climate change costs take economic growth as exogenous, effectively assuming there are no substantive macroeconomic feedbacks from climate change.
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