A hot take
Global warming to cost world’s economy $38T, study says
Climate change will reduce future global income by about 19 per cent in the next 25 years compared to a fictional world that’s not warming, with the poorest areas and those least responsible for heating the atmosphere taking the biggest monetary hit, a new study said.
Climate change’s economic bite in how much people make is already locked in at about $38 trillion (U.S.) a year by 2049, according to Wednesday’s study in the journal Nature by researchers at Germany’s Potsdam Institute for Climate Impact Research. By 2100, the financial cost could hit twice what previous studies estimate.
“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 and the U.S., with a projected median income reduction of 11 per cent each and France with 13 per cent,” said study co-author Leonie Wenz, a climate scientist and economist.
These damages are compared to a baseline of no climate change and are then applied against overall expected global growth in gross domestic product, said study lead author Max Kotz, a climate scientist. So while it’s 19 per cent globally less than it could have been with no climate change, in most places, income will still grow, just not as much because of temperatures.
For the past dozen years, scientists and others have been focusing on extreme weather such as heat waves, floods, droughts, storms as the having the biggest climate impact. But when it comes to financial hit the researchers found “the overall impacts are still mainly driven by average warming, overall temperature increases,” Kotz said. It harms crops and hinders labour production, he said.
“Those temperature increases drive the most damages in the future because they’re really the most unprecedented compared to what we’ve experienced historically,” Kotz said. Last year, a record-hot year, the global average temperature was 1.35 C warmer than preindustrial times, according to the U.S. National Oceanic and Atmospheric Administration.
The globe has not had a month cooler than the 20th-century average since February 1979.
In the U.S., the southeastern and southwestern states get economically pinched more than the northern ones with parts of Arizona and New Mexico taking the biggest monetary hit, according to the study. In Europe, southern regions, including parts of Spain and Italy, get hit harder than places like Denmark or northern Germany.
Only Arctic adjacent areas — Canada, Russia, Norway, Finland and Sweden — benefit, Kotz said. It also means countries which have historically produced fewer greenhouse gas emissions per person and are least able to financially adapt to warming weather are getting the biggest financial harms too, Kotz said. The world’s poorest countries will suffer 61 per cent bigger income loss than the richest ones, the study calculated.
“It underlies some of the injustice elements of climate,” Kotz said.
The study examined 1,600 global areas that are smaller than countries, took several climate factors into account and looked at how long climate economic shocks last, Kotz said. The study examined past economic impacts on average global domestic product per person and uses computer simulations to look into the future to come up with their detailed calculations.