Nordhaus-Damage Function

The Nordhaus Damage Function is a way economists estimate how economic productivity and growth are affected by climate change. It translates the amount of global warming into the economic damages—such as decreased crop yields, rising health costs, or infrastructure loss—that result from higher temperatures. Essentially, it provides a relationship showing that as temperatures increase, the costs and damages to the economy also grow, helping policymakers understand the potential financial impacts of climate change and the importance of mitigation efforts.