The global economy is facing approximately $38 trillion in damages each year from the effects of climate change, equating to an income reduction of 19% per annum, a new study in the journal Nature has found.
According to the study, by the Potsdam Institute for Climate Impact Research (PIK), even if CO2 emissions were to be ‘drastically cut’ from today, these annual costs are set to linger until at least 2050.
In addition, it noted that the damages generated are six times larger than the mitigation costs needed to limit global warming to two degrees.
In compiling its report, PIK utilised empirical data from more than 1,600 regions around the wold over the past 40 years, to assess the future impacts of changing climatic conditions on economic growth.
Income reduction
“Strong income reductions are projected for the majority of regions, including North America and Europe, with South Asia and Africa being most strongly affected,” commented PIK scientist and co-author Maximilian Kotz.
“These are caused by the impact of climate change on various aspects that are relevant for economic growth such as agricultural yields, labour productivity or infrastructure.”
By 2050, global annual damages will likely be somewhere between $19 trillion and $59 trillion per annum, the study found, depending on the level of mitigation strategies in place, as well as changes in rainfall and temperature variability.
By 2100, meanwhile, said damages could be 60% higher, it noted.
‘Massive economic damages’
“Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly-developed ones such as Germany, France and the United States,” added PIK scientist Leonie Wenz, who led the study.
“These near-term damages are a result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. And we have to cut down our emissions drastically and immediately – if not, economic losses will become even bigger in the second half of the century.”
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