A new study has pointed out concerning new predictions about how the global economy will respond to climate change. The study shows that the global economy is expected to experience a significant 19% decrease in income over the next 26 years because of climate change, compared to a hypothetical scenario without climate change impacts.
The estimated economic damage, amounting to $38 trillion annually, could be up to six times greater than the costs of shifting away from fossil fuels and limiting warming as per the agreements of the Paris Climate Agreement. Paris Climate Agreement requirements.
Most importantly, this anticipated damage is unavoidable. Even if the world manages to restrict global warming to no more than 2°C, the global economy could suffer up to 20% average regional income loss. The average global temperatures have already risen by a bit more than half of the increase since 1975. In a situation where no action is taken to mitigate, the damage could surge to 60% income loss. 1° Celsius The economic impact of climate change
Almost all countries are expected to experience significant economic losses and forgone opportunities due to the impact of climate change. However, certain countries will face more severe impacts than others. The data reveals that countries with lower incomes and historically lower emissions are likely to suffer disproportionately. These countries are expected to endure income losses 61% higher than those in higher-income countries, and 40% greater than in higher-emission countries. This underscores a challenging reality where the nations least accountable for climate change might encounter the most severe economic downturns.
Leonie Wenz, the lead researcher from the Potsdam Institute for Climate Impact Research in Germany, emphasized the importance of understanding the impact of climate change on the economy. This understanding is crucial for governments, central banks, private businesses, households, etc., to plan and adapt in order to prevent at least some of these damages.
Leonie Wenz also highlighted the economic benefits of mitigating climate change, even from a purely economic perspective. While there has been significant focus on the cost of protecting the climate in public debates, the potentially high cost of inaction has received much less attention and discussion. ZME Science.
While researchers anticipated substantial economic damages from climate change, they were still surprised by the magnitude of the damages. Additionally, they did not expect the damages to be much higher than the cost required to limit global warming to 2°C. Furthermore, they were surprised to find damages in the majority of countries worldwide, including highly developed ones that currently have cooler climates, such as Germany or France. The dimension of injustice in these findings is also shocking.
In the latter half of the century, significant economic damages and costs for society can still be avoided if emissions are drastically and immediately reduced.
The cost of taking action versus doing nothing