Climate Change to Cost Global Economy 19% by 2050, Study Finds
In a groundbreaking study published in “Nature,” researchers from the Potsdam Institute for Climate Impact Research (PIK) have found that even with drastic cuts to CO2 emissions starting today, the world economy is already set to lose 19% of its income by 2050 due to climate change. The damages, estimated to be six times larger than the costs of limiting global warming to two degrees, were calculated using empirical data from over 1,600 regions worldwide over the past 40 years.
Devastating Economic Impacts Across the Globe
The study projects strong income reductions for most regions, including North America and Europe, with South Asia and Africa being the hardest hit. These losses are attributed to the impact of climate change on various factors crucial to economic growth, such as agricultural yields, labor productivity, and infrastructure. The global annual damages are estimated to be around $38 trillion, with a likely range of $19-59 trillion by 2050. These figures primarily result from rising temperatures and changes in rainfall and temperature variability, and could be even higher when accounting for other weather extremes like storms and wildfires.
Developed Nations Not Spared from Losses
“Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly-developed ones such as Germany, France and the United States,” says PIK scientist Leonie Wenz, who led the study. The near-term damages are a result of past emissions, and more adaptation efforts will be needed to avoid at least some of them. If emissions are not drastically and immediately reduced, economic losses could reach up to 60% on global average by 2100, clearly demonstrating that protecting the climate is much cheaper than not doing so.
Inequity in Climate Change Impacts
The study highlights the considerable inequity of climate impacts, with countries in the tropics suffering the most due to their already warmer climates. The countries least responsible for climate change are predicted to suffer income losses 60% greater than higher-income countries and 40% greater than higher-emission countries, despite having the least resources to adapt to the impacts.
“It is on us to decide: structural change towards a renewable energy system is needed for our security and will save us money. Staying on the path we are currently on, will lead to catastrophic consequences. The temperature of the planet can only be stabilized if we stop burning oil, gas and coal,” says Anders Levermann, Head of Research Department Complexity Science at PIK and co-author of the study.