Climate change to wreck global income by 2050, study shows

POTSDAM: A study by the Potsdam Institute for Climate Impact Research (PIK) published in the scientific journal Nature on Wednesday claimed that climate change is poised to wipe out some 20 per cent of global GDP by 2050.

Researchers in Germany estimate that climate change will shrink global GDP at least 20 per cent by 2050. Scientists said that figure would worsen if countries fail to meet emissions-cutting targets.

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Researchers at PIK said their calculations were based on the prospect of countries such as Germany achieving their emissions-cutting goals. Currently, most countries look unlikely to achieve these targets, meaning the financial impact could be greater still than the drastic damage projected.

According to the study’s calculations, the economic burden of climate change could reach $38 trillion (€35.6 trillion) annually, a sum six times higher than the estimated cost of limiting global temperatures to 2 degrees Celsius above pre-industrial levels.

Those least at fault will be hit hardest

The study points out that despite damage affecting different regions to different degrees, poorer regions and those contributing least to global warming will be hit hardest.

“Countries least responsible for climate change are predicted to suffer income loss that is 60 per cent greater than the higher-income countries and 40 per cent greater than higher-emission countries,” said Anders Levermann, a senior PIK scientist.

Researchers projected, for instance, that the industrial economies of Germany and the United States would shrink by roughly 11 per cent by mid-century (13 per cent for France), even if climate action is successfully taken.

PIK scientists analysed 40 years of climate data collected across more than 1,600 regions for the study, they excluded, however, the cost of damage caused by natural disasters such as storms and fires, which have also intensified with climate change. These would drive damages significantly higher.

“High-income losses are projected for most regions, including North America and Europe, with South Asia and Africa being the hardest hit,” according to Maximilian Kotz, one of the study’s authors. “These losses are caused by a wide range of economically relevant effects of climate change, such as consequences for agricultural yields, labour productivity and infrastructure.”

Inaction still costs more

Fellow researcher Leonie Wenz underscored the danger of complacency, noting that the current calculations dealt with the effects of carbon already released into the atmosphere, pointing out that society quickly needs to find ways to mitigate the impact of climate change.

“In addition, we must drastically and immediately reduce our CO2 emissions — otherwise the economic losses will be even higher in the second half of the century and will amount to a global average of up to 60 per cent by the end of the century,” she said.

According to the World Bank, global GDP surpassed $100 trillion in 2022 and would double by 2050 — if not for the drag of climate change.

Observers say the PIK estimate is likely an undercount of the actual economic impact.

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Others pointed out that the new study appears to confirm conclusions similar to those in the so-called Stern Report, which was produced by economist Nicholas Stern in 2006 at the behest of the UK government.

Stern, too, projected that climate change would take a 20 per cent bite out of global GDP by the middle of the century, as well as arguing that the cost of combatting climate change was far less than the cost of dealing with the damage it would cause.