A study predicts that the global effects of a changing climate might reduce global average income by almost 19% by the middle of the century, to $38 trillion annually, as many parts of the world experience extreme weather.
Financial Cost Of Climate Change
Researchers from the Potsdam Institute for Climate Impact Research (PIK) said their calculations were predicated on the likelihood that nations like Germany would meet their carbon reduction targets.
Since it appears doubtful that most nations would meet these goals, the cost burden may even outweigh the severe harm anticipated.
The study's estimates suggest that the financial cost of climate change might exceed the predicted cost of keeping global temperatures to 2 degrees Celsius above pre-industrial levels by six times, to the tune of $38 trillion per year.
According to the research, the losses are already fixed and unaffected by decisions on emissions in the future.
The report's co-author, Maximilian Kotz, said that there isn't much the globe can do to lessen the effects.
"What we find is that over the next 25 to 30 years, impacts on the economy will be consistent across different emissions scenarios, regardless of whether we enter a high-emission or low-emission world," he said.
The study examined economic and climatic data from over 1,600 global areas during the previous 40 years in order to project future effects. The worst affected are probably those who contribute the least to global pollution.
The authors estimate that the cost of lowering greenhouse gas emissions would be only one-sixth of the $38 trillion impact of climate change by 2050 and conclude that addressing climate change would be significantly less expensive than putting up with the economic damage.
"Important channels such as impacts from heatwaves, sea-level rise, tropical cyclones, and tipping points, as well as non-market damages such as those to ecosystems and human health, are not considered in these estimates," the report said.
Poorer Nations Hit Harder
The analysis makes clear that while harm would impact diverse areas to varying degrees, poorer areas and those with the lowest contributions to global warming would be most severely affected.
"Countries least responsible for climate change are predicted to suffer income losses that are 60% greater than those of higher-income countries and 40% greater than those of higher-emission countries," said Anders Levermann, a senior PIK scientist.
The PIK estimate, according to observers, probably underestimates the true economic impact.
Others drew attention to the fact that the new research seems to support findings from the so-called Stern Report, which economist Nicholas Stern prepared in 2006 at the UK government's request.
In addition to predicting that the expense of addressing the damage caused by climate change would be significantly greater than that of preventing it, Stern also stated that by the middle of the century, the global GDP would have decreased by 20% due to climate change.
The World Bank projects that, absent the impact of climate change, the world economy would double from its $100 trillion level in 2022 to $2 trillion by 2050.
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