Climate change due to carbon emissions will end up shrinking global GDP by roughly US$38 trillion in 2050, which is equivalent to almost one-fifth. This may come regardless of how aggressive efforts are to minimize carbon pollution.
Climate Change and Global Economy
The "The economic commitment of climate change" study says that economic fallout due to climate change could end up increasing spending by up to tens of trillions of dollars per year by 2100. This is if the Earth would significantly get warmer by more than two degrees Celsius above the levels of the mid-19th century.
The average surface temperature of the planet has already reached 1.2 degrees Celsius over this benchmark. This is significant enough to amplify droughts, heatwaves, tropical storms, and floodings.
The researchers found that the annual investment that is necessary for capping global change under two degrees Celsius is a small fraction compared to the impending damage that could be avoided. Max Kotz, the study's lead author and a complexity science expert at Potsdam Institute for Climate Impact Research (PIK), explains that staying within the threshold of two degrees Celsius could end up limiting the average regional income loss to just 20%, in comparison to a whopping 60%.
However, economists do not agree with how much should be spent in order to avoid the damages of climate. There are some who call for large investments, though others argue that waiting for richer societies and advanced technologies could be more cost-effective.
Nevertheless, the calculations made in the study are extremely relevant for cost-benefit analyses, as noted by researcher and co-author Leonie Wenz. The findings could also help in informing strategies for adapting to the impacts of climate change, business risk assessments, and negotiations led by the UN regarding compensation for developing nations that have hardly contributed to the matter.
Costs of Climate Change
The study also found that tropical nations, with several of them having shrinking economies due to climate change, will take the hardest toll. Anders Levermann, a senior PIK scientist, explains that countries that are least responsible for the global phenomenon may suffer income loss that is roughly 40% greater compared to higher-emission countries and 60% greater compared to higher-income countries. They are also the countries with the least resources necessary for adapting to the effects.
However, rich countries will not be immune to the effects. Both the US and Germany are predicted to see an income shrivel equivalent to 11% by 2050. France may also see a plummet of 13%.
Such projections are based on climate and economic data worth four years from 1,600 regions. Because of this, the study could possibly cover damages that were ignored in earlier studies.
The scientists also examined fluctuations of temperatures in a year rather than just looking into averages. They also looked into how extreme weather events led to economic impacts beyond the year they happened. Wenz explains that by accounting for these added variables, the damages projected were roughly 50% larger compared to when changes in annual averages were the only figures considered.
The team discovered that inevitable damage could lead to a global GDP slash equivalent to 17% in 2050. This is in comparison to a scenario where there are no added impacts of climate change after 2020.
However, it is likely that the new calculations could be conservative. Policy director Bob Ward from the Grantham Research Institute on Climate Change and Environment, says that these projections are likely underestimates of the actual climate change impact costs.
While such projections are alarming, efforts to cut greenhouse gas emissions as quickly as possible are still important in order to avoid economic impacts post-mid-century that are even more devastating.
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