Recent research indicates that even with immediate significant reductions in CO2 emissions, the global economy is on track for a 19% income decline by 2050 due to climate change. This economic damage is estimated to be six times greater than the cost required to keep global warming below two degrees. The study, which analyzed data from over 1,600 regions around the globe over the past four decades, was conducted by scientists from the Potsdam Institute for Climate Impact Research (PIK), who investigated how climate change is projected to affect economic growth in the future.
Recent research indicates that even with immediate significant reductions in CO2 emissions, the global economy is on track for a 19% income decline by 2050 due to climate change, as reported in Nature. This economic damage is estimated to be six times greater than the cost required to keep global warming below two degrees. Using empirical data from over 1,600 regions globally over the last 40 years, PIK scientists evaluated future climatic impacts on economic growth and their sustainability.
“We anticipate severe income drops across most regions, especially in North America and Europe, with South Asia and Africa bearing the brunt. These declines arise from climate change’s effects on critical factors for economic growth, including agricultural output, workforce productivity, and infrastructure,” states PIK researcher and study lead Maximilian Kotz. The global annual damage is projected at $38 trillion, likely ranging between $19 and $59 trillion by 2050. This damage is primarily linked to increasing temperatures, alongside alterations in precipitation patterns and temperature fluctuations. Adding the impact of extreme weather events such as storms or wildfires could further elevate these costs.
Substantial Economic Burden for the United States and EU
“Our findings indicate that climate change will impose significant economic costs in nearly all countries in the next 25 years, including developed nations like Germany, France, and the United States,” remarks PIK scientist Leonie Wenz, who led the research. “These upcoming damages are directly tied to emissions we’ve generated in the past. We must increase our adaptation measures to mitigate some of these effects. Moreover, drastic and immediate emissions reductions are essential; otherwise, we risk incurring losses that could reach 60% on a global average by 2100. This clearly illustrates that taking action to safeguard our climate is far less expensive than ignoring the problem, not to mention the profound non-economic consequences such as loss of life and biodiversity.”
Currently, most global assessments of economic losses from climate change tend to emphasize national averages over extended periods based on future temperature estimates. The researchers enhanced this approach by integrating new empirical evidence regarding climate impacts on economic performance from over 1,600 subnational areas in the last 40 years, focusing on projections for the next 26 years. This methodology allowed for more precise assessments of local damages linked to shifts in temperature and precipitation, while also addressing some of the uncertainties in long-term projections. The team melded empirical models with advanced climate simulations (CMIP-6) and took into account how persistent climate impacts have historically influenced economies.
Least Responsible Nations Will Face the Greatest Challenges
“Our research underscores the stark inequities concerning climate impacts: while damages are expected globally, nations in tropical regions are projected to experience the most severe effects due to their already high temperatures. Consequently, further warming will be especially detrimental in those areas. Countries that have contributed the least to climate change are anticipated to endure income losses 60% more significant than those faced by wealthier nations and 40% higher than those from countries with greater emissions. Additionally, these nations possess the least capacity to adapt to the ongoing changes. It’s essential for us to choose wisely: transitioning to a renewable energy system is critical for our security and can lead to substantial savings. Continuing with our current trajectory will result in disastrous outcomes. Stabilizing the planet’s temperature hinges on halting the burning of fossil fuels like oil, gas, and coal,” asserts Anders Levermann, Head of Research Department Complexity Science at the Potsdam Institute and co-author of the study.
