How to Include the Effects of Rising Temperatures in Long-Term GDP Projections

IMF How To Notes, November 14, 2025

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Climate change threatens macroeconomic and financial stability through rising temperatures, shifting precipitation patterns, sea level rise, and more frequent and intense extreme weather, in addition to other factors.
The note presents a method to integrate the effects of rising temperatures into long-term macroeconomic and GDP projections to better assess vulnerabilities and future risks.
Impact assessments for 171 countries are available in an online Data Appendix.

Step 1: Estimating macroeconomic effects of rising temperatures from historical data.
Step 2: Building temperature change scenarios from climate model simulations.
Step 3: Integrating impacts into long-term GDP projections.
The methodology addresses key empirical challenges and can be leveraged to assess effects of temperature increases on fiscal variables, including public debt.

The approach connects historical temperature–macroeconomic relationships with forward-looking climate model scenarios to produce long-term GDP projections that account for rising temperatures.
The methodology is applicable for assessing vulnerabilities and future risks relevant to macroeconomic and financial stability.
The framework can be used to evaluate fiscal implications, including impacts on public debt.

Impact assessments cover 171 countries and are provided in an online Data Appendix.