New research reveals that the economic impact of climate change is six times worse than previously estimated. With each 1C increase in global temperature, there is a 12% decline in the world’s gross domestic product (GDP), a significantly higher rate than previously thought. The study warns that the world has already warmed by over 1C since pre-industrial times, and further warming, projected to reach 3C by the end of the century, will incur substantial economic costs.
The paper, authored by economists Adrien Bilal and Diego Känzig, suggests that a 3C temperature increase could lead to drastic declines in output, capital, and consumption, exceeding 50% by 2100. This level of economic loss is likened to the financial toll of a continuing permanent war.
Bilal highlights that if climate change continues unabated, people could be 50% poorer by the end of the century. The research underscores the significant impact on purchasing power, with potential wealth losses comparable to wartime economic drains.
The study offers a more comprehensive assessment of climate change’s economic costs by analyzing global impacts rather than individual countries’ perspectives. It emphasizes the interconnected nature of climate impacts, such as heatwaves, storms, and floods, which adversely affect crop yields, productivity, and investment.
Despite the heavy economic toll, the paper suggests that even with substantial emissions reductions, climate change will still impose significant costs. Even if warming is limited to 1.5C, a globally agreed-upon goal that appears increasingly challenging, GDP losses are projected to be around 15%.
The research underscores the urgency for wealthy nations like the US to take action to reduce emissions, given the uniform economic impact of climate change worldwide. While transitioning away from fossil fuels entails costs, the study emphasizes that these costs are minimal compared to the economic toll of unchecked climate change.
