Climate risk is not climate determinism

Climate economics necessarily simplifies the relationship between a changing climate and economic outcomes. Reduced-form relationships linking temperature to aggregate output compress heterogeneous hazards and their effects on labour, capital and productive systems into models that must ultimately be extrapolated beyond historical experience. Tol's article ‘Climate determinism reborn’ interprets large climate-damage estimates and concern about catastrophic climate change as a revival of environmental determinism. This framing confuses determinism with risk. Climate change is not simply a marginal shock to output but a source of systemic risk whose magnitude, transmission and severe tail remain deeply uncertain. The challenge for climate economics is therefore not to identify the ‘correct’ damage function but to characterise this uncertainty and support decisions robust across plausible futures. Stress tests in other risk-management domains apply the same logic – adverse scenarios are not predictions but tests of whether systems remain resilient when central assumptions fail.