A recent study reveals that the economic damages caused by climate change are six times worse than previously believed, and global warming is expected to reduce wealth at a rate equivalent to the amount of money lost in a perpetual war.
Significant Financial Costs
The researchers discovered that a 1 degree Celsius increase in global temperature causes a 12% decrease in world gross domestic product (GDP), a much greater estimate than that of earlier studies.
Since pre-industrial times, the global temperature has already increased by more than 1 degree Celsius, and many climate experts believe that by the end of this century, the ongoing combustion of fossil fuels will have raised global temperatures by 3 degree Celsius.
The new working paper, which has not yet undergone peer review, outlines the significant financial costs associated with this scenario.
The study says that a 3 degree Celsius increase in temperature will cause "precipitous declines in output, capital, and consumption that exceed 50% by 2100". It goes on to say that this economic loss is "comparable to the economic damage caused by fighting a war domestically and permanently" because of how great it is.
"There will still be some economic growth happening, but by the end of the century, people may well be 50% poorer than they would've been if it weren't for climate change," said Adrien Bilal, an economist at Harvard who wrote the paper.
Bilal stated that if global warming hadn't occurred over the previous 50 years, people's purchasing power-or how much they could buy with their money-would already be 37% more than it is today.
If the climate issue becomes worse, this lost wealth will spin out of control, resembling the kind of economic depletion that occurs during times of war.
The social cost of carbon, or the cost in dollars of damage done for every additional ton of carbon emissions, is $1,056 per ton, which is a substantially greater estimate of economic losses than earlier research.
This is in contrast to a range that the US Environmental Protection Agency (EPA) established, estimating that the cost per ton will be approximately $190.
Read Also: Moderate CO2 Emissions Reduction Achievable with Minimal Economic Loss
Holistic Perspective
The researchers stressed that the new study looks at the economic cost of climate change from a more "holistic" perspective by examining it globally as opposed to nationally.
The study concluded that, although lower-income nations will begin at a lower wealth level, the economic effects of the climate issue will be remarkably similar worldwide.
This notes that this should encourage wealthier nations like the United States to take steps to reduce emissions that warm the world for their own economic benefit.
The study also said that climate change will have a significant economic impact even with significant emissions reductions. The GDP losses would still be about 15% even if global warming was limited to little more than 1.5 degrees Celsius by the end of the century-a widely accepted objective that now seems to have fallen beyond reach.
"The economy may keep growing, but less than it would because of climate change. It will be a slow-moving phenomenon, although the impacts will be felt acutely when they hit," Bilal said.
Related Article: Asia Pacific Losses US$65 Billion In Economy Due To Natural Disasters
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