The Economics of Climate Change: Conceptualizing the Costs and Benefits of Transitioning to Low Low-Carbon Economy

Despite escalating climate risks, many economies continue to underprice the long-term costs of inaction, resulting in delayed transitions to sustainable, low-carbon pathways. This study examines the economics of climate change by conceptualizing the costs and benefits of transitioning to a low-carbon economy, with a focused analysis on Nigeria as a case within the global South. Using secondary data, trend analysis, and sectoral estimates from 2015 to 2024, the study evaluates economic losses from climate impacts alongside potential gains from clean energy investments, job creation, and improved public health. Results show that Nigeria incurred over ₦3.5 billion in infrastructure losses from climate-related flooding in 2022 alone, with cumulative annual agricultural losses rising from ₦210 billion in 2015 to ₦370 billion in 2023. Conversely, projections suggest that up to 190,000 green jobs and ₦82 billion in health cost savings could be realized by 2030 through renewable energy deployment and emission reductions. Yet, only 3.5% of global clean energy investment reached Sub-Saharan Africa in 2023, underscoring deep regional disparities. The study highlights the critical role of carbon pricing, clean technology investment, and institutional resilience in delivering equitable and efficient transitions. It recommends that Nigeria and peer economies adopt robust green financing models, strengthen policy coherence, and prioritize adaptation investments in high-risk sectors like agriculture and transport to unlock the full economic potential of climate action.