Will Climate Impacts Cost the World $7.9 trillion by 2050?

Climate change could directly cost the world economy $7.9 trillion by 2050 as increased drought, flooding and crop failures hamper growth and threaten infrastructure, according to new analysis by Economist Intelligence Unit (EIU).

EIU’s Climate Change Resilience Index measured the preparedness of the world's 82 largest economies and found that based on current trends the fallout of warming temperatures would shave off three percent of global GDP by 2050. Africa was most at-risk, with 4.7 percent of its GDP in the balance. In general, developing nations faired poorer in terms of resiliency than richer ones. Of the countries evaluated, Angola stood to lose the most—as much as 6.1 percent of gross domestic product.

World map showing average real GDP loss by 2050 by world region, according to a study by the Economist Intelligence Unit

The study put this down to a mixture of a lack of quality infrastructure, as well as its geographical exposure to severe drought, soil erosion and rising sea levels. Land degradation in Angola would prove a "significant" economic hindrance, the report said, given that agriculture is its largest employer. Nigeria (5.9 percent negative GDP), Egypt (5.5 percent), Bangladesh (5.4 percent) and Venezuela (5.1 percent) were the next most climate vulnerable nations identified in the analysis.

The analysis said rising temperatures meant the global economy was projected to hit $250 trillion by 2050, as opposed to $258 trillion with no climate impact. While the United States is forecast to be one of the least impacted, the EIU noted that President Donald Trump's policies represented a "temporary setback" in the climate fight.

Russia was predicted to lose five percent of GDP by 2050 and will "suffer more than most other countries in the world from the negative effects of climate change", it said. This held true even when potential benefits in increased agriculture were taken into account.

Nations agreed in Paris in 2015 to work to limit temperature rises to "well below" two degrees Celsius, and 1.5-C if possible. To do so, the global economy must rapidly decrease its greenhouse gas emissions—a source of controversy in developing nations which say their economic growth shouldn't suffer after decades of fossil fuel use by wealthier countries.

In a worst-case scenario, climate impacts could set off a feedback loop in which climate change leads to economic losses, which lead to social and political disruption, which undermines both democracy and our capacity to prevent further climate damage. These sort of cascading effects are rarely captured in economic models of climate impacts. And this set of known omissions does not, of course, include additional risks that we may have failed to have identified.

The urgency and potential irreversibility of climate effects mean we cannot wait for the results of research to deepen our understanding and reduce the uncertainty about these risks. This is yet another reason why it is urgent to pursue a new, greener economic path for growth and development. If we do that, a happy ending is still possible. But if we wait to be more certain, the only certainty is that we will regret it.

So for now the climate impacts estimates put the “losses” by 2050 at USD 8 trillion.

Reference:

1. Climate impacts 'to cost world $7.9 trillion' by 2050, 20 Nov 2019, Phys.org

2. Naomi Oreskes and Nicholas Stern, Climate Change Will Cost Us Even More Than We Think https://www.nytimes.com/