No matter how severely humanity reduces carbon pollution, experts predict that the global Gross Domestic Product (GDP) will decrease by nearly a fifth, or USD $38 trillion, in 2050 due to climate change triggered by CO2 emissions already in the atmosphere. However, scientists noted in the journal Nature that reducing greenhouse gas emissions as soon as feasible is still essential to averting much more severe economic effects after the middle of the century. The Earth’s average surface temperature has already risen by 1.2 degree Celsius over that threshold, which is significant enough to intensify heat waves, droughts, flooding, and tropical storms that are rendered more severe by increasing sea levels. The analysis indicates that if global warming continues to accelerate above 2 degree Celsius over mid-19th century values, the economic consequences of climate change might rise to tens of trillions of dollars annually by the year 2100.
The researchers discovered that the annual investment required to keep global warming below 2 degree Celsius, the main objective of the 2015 Paris Agreement, is minuscule compared to the harms that would be prevented. The study led by Max Kotz from Potsdam Institute for Climate Impact Research (PIK) noted that adhering to the 2 degree Celsius barrier “could limit average regional income loss to 20% compared to 60%” in a high-emissions scenario. On the amount that should be spent to prevent climate damage, economists cannot agree. While some say that waiting until nations are wealthier and technology is more evolved would be more cost-effective, others want enormous investment today.
Poor countries hit hardest
The authors and other experts noted that although the new research avoids this argument, its staggering estimate of the economic implications support the need for bold near-term action. According to the authors, their calculations are relevant to these cost-benefit studies. The study said that most tropical countries will be most affected, many of which have already seen their economies contract due to climate harm. Countries least responsible for climate change are predicted to suffer income loss 60% greater than the higher-income countries and 40% greater than higher-emission countries. Additionally, these countries have the fewest resources to adjust to its effects. Wealthy nations won’t escape Nature’s fury: by 2050, income in France and Germany is expected to decline by 13% and 9%, respectively.
How relevant are the projections?
Instead of using national statistics, the projections are based on forty years of economic and climatic data from 1,600 locations, which allows for the inclusion of effects that previous studies overlooked, including excessive rainfall. In addition to focusing on averages, the researchers also examined annual temperature variations and the long-term economic impact of catastrophic weather occurrences. By using additional climate variables, the damages are about 50% larger if they only included changes in annual average temperatures, which served as the foundation for most previous estimations. They also inferred that without further climate consequences after 2020, the world economy’s GDP would have decreased by 17% by 2050 due to inevitable harm.
The cost estimate is conservative. Damages linked to sea-level rise, stronger tropical cyclones, the destabilization of ice sheets in West Antarctica and Greenland, and the decline of primary tropical forests are all excluded. Even though it was determined that trillions of dollars worth of losses were predetermined, reducing carbon emissions still makes sense. Climate change brought on by rising temperatures and altered monsoon rainfall patterns in India could cost the country’s economy 2.8% of its GDP and lower living standards for almost half of its population by 2050, according to the Department of Currency and Finance 2022–2023 report. By 2100, climate change might cost India between 3% and 10% of its GDP yearly if appropriate mitigation measures are not implemented. According to projections by the Ministry of Environment, Forest and Climate Change, the cumulative total expenditure for adapting to climate change in India is estimated to be INR85.6 lakh crore (at 2011-12 prices) by 2030.
