Climate change is also hitting the economy hard, a study shows. The consequences of the crisis reveal massive inequality.
Potsdam – With the climate crisis, it’s not just average global temperatures that are increasing. Droughts, droughts, but also heavy rain and floods are becoming more common. Researchers at the Potsdam Institute for Climate Impact Research (PIK) have now determined how expensive the consequences of the climate crisis will be for the global economy. In 2050, the global economy will lose 19 percent compared to a world without climate change. In concrete terms, that’s $38 trillion.
“Our study shows that climate change will cause massive economic damage in almost all countries in the world over the next 25 years,” PIK quoted study leader Leonie Wenz as saying in a statement. “It costs us far less to protect the climate than not to do so.” The costs of limiting global warming to two degrees will be almost six trillion dollars by the middle of the century, as Wenz explains when asked by
IPPEN.MEDIA
. This means the damage is six times higher.
Climate change harms the economy through lower agricultural yields and reduced productivity
In their study, the Potsdam researchers analyzed empirical findings on how weather changes and extremes have influenced economic growth in 1,600 subnational regions, in Germany the federal states, over the last 40 years and transferred them to the next 26 years using 21 climate models.
They then compared how the reduction in regional gross domestic product compares to a world without additional climate change. These could be caused in a number of ways by the increase in temperature and changes or extremes in precipitation. When asked, Wenz cited “reduced agricultural yields, reduced labor productivity, planning uncertainties, health effects or infrastructure damage.”
The trillion-dollar damage “results mainly from the increase in temperature, but also from changes in precipitation and temperature variability,” explained PIK researcher Maximilian Kotz in a statement. Other extreme weather events such as storms or forest fires are not taken into account in the study. “However, results of other studies suggest that these can increase the calculated damage,” added study author Leonie Wenz in response to an
IPPEN.MEDIA
query.
Trillion-dollar damage to the economy “is a result of our previous emissions”
“The damage that awaits us by then is a result of our previous emissions,” explained Wenz. “In the second half of the century, however, the damage will vary greatly, depending on how much climate protection we do from now on.” In a pessimistic scenario that assumes global warming of around 4.4 degrees, the losses would be almost 60 percent. With ambitious climate protection to limit warming to two degrees, it could be 20 percent.
Germany's economic damage is below the global average. The emissions already caused today will lead to around eleven percent loss of income in 2024, Wenz explained to
IPPEN.MEDIA
. In countries such as Botswana, Namibia and Mali, the damage was around 25 percent, and in Vietnam and Thailand it was around 23 percent.
Study shows significant inequality in the impact of climate change on the economy
“Our study highlights the considerable inequality of climate impacts,” explained Anders Levermann, who is also involved in the study published in the journal
Nature
. Tropical countries are most affected. “The countries least responsible for climate change are expected to suffer income losses that are 60 percent higher than in higher-income countries and 40 percent higher than in higher-emitting countries.” At the same time, they had the fewest resources to adapt to climate impacts. (ms)