The global economy has evolved into a borderless age of climate change. Numerous studies such as those of Stern (2007) and Jones et al. (2013) have pointed out that the nature of climate change is an international and intergenerational externality problem. This human-induced change in the rising global mean temperature is mainly due to the enormous emission of carbon dioxide to pre-industrial levels arising from the combustion of fossil fuels. To date, more than 100 countries have adopted a global warming limit of 2°C or below (relative to pre-industrial times) as a general guideline (IPCC, 2007). That is, the concentration of carbon dioxide should be maintained at a range of 400-450 parts per million (ppm). The United States and China, the two largest national economies in the world, have recently unveiled a negotiated deal to reduce their greenhouse gas output, with China agreeing to cap its emissions by 2030 or earlier and the US pledging to cut its emissions to 26-28% below 2005 levels by 2025.

The issues of climate change include not only the key investigation of global warming but also the concerns about rising sea levels, melting glaciers, changes in precipitation and storminess, and so on. Thus, climate change has become a complicated problem of uncertainty to a greater extent than any other environmental externality. Over the past two decades, academics and researchers have employed various methods to provide estimates of the economic effects of climate change. An early study conducted by Nordhaus (1994) indicates that the effect of 3°C global warming is equivalent to a loss of 1.3 percent of GDP. Later studies have estimated net gains and losses associated with climate change for different regions at different times (see, e.g., Mendelsohn et al., 2000, Tol, 2002, and Hope, 2006). According to Dell et al. (2014), ter on, sch more nd Public Financeestimates across labor productivity, industrial output, and economic growth approximately converge to a 1-2 percent loss per 1°C in poor countries.

More strikingly, climate change, via a change in Mother Nature, triggers unexpected consequences of economic evolution in the long run. Climate change does not only create impact on economic phenotypic evolution but also on economic genotypic evolution. For instance, climate change affects preference rankings of individuals, politico-economic institutions in society, and inventions of an economy, which are the main economic genotypes in modern market economies. From the perspective of economic evolution, the process of genotypic evolution is in principle an unpredictable process and allows only for ex post forecasting and modeling (Faber et al., 1996, Chap. 8). During the age of climate change, economic genotypic evolution takes place at a much faster rate than ever and, concurrently, it creates unexpected influences on the evolution of economic phenotypes. These include, for instance, changing market structure, the distribution of income and wealth among people, and the production techniques employed. Moreover, climate change generates tremendous impact that cannot be properly quantified or numerically measured.