Climate Change Could Cut Global Income By 19 Percent In 25 Years, Finds Study

The global economy is expected to lose about 19 per cent income in the next 25 years due to climate change, with countries least responsible for the problem and having minimum resources to adapt to impacts suffering the most, according to a new study published on Wednesday. 

The study by scientists at Germany's Potsdam Institute for Climate Impact Research said climate impacts could cost the global economy around USD 38 trillion a year by 2049. 

“Our analysis shows 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,” said scientist Leonie Wenz who led the study published in the journal Nature. 

South Asia and Africa will be strongly affected, said Maximilian Kotz, another researcher. The researchers looked at detailed weather and economic data from over 1,600 regions globally, covering the last 40 years. 

They said global income loss could vary between 11 per cent and 29 per cent, depending on different climate scenarios and uncertainties in the data. 

The predicted loss is massive and already about six times more than what it would cost to reduce carbon emissions enough to keep the average temperature rise below two degrees Celsius, the researchers said. 

These economic damages are mostly due to rising average temperatures. However, when the researchers also considered other factors like rains and storms, the predicted economic damages increased by about 50 per cent and varied more from one region to another. 

While most regions in the world are expected to suffer economically due to these changes, they said regions near the poles might see some benefits due to less temperature variability. 

On the other hand, the hardest-hit regions will likely be those closer to the equator, which historically have contributed less to global emissions and currently have lower incomes. 

“Our study highlights the considerable inequity of climate impacts: We find damages almost everywhere, but countries in the tropics will suffer the most because they are already warmer. Further temperature increases will therefore be most harmful there," said Anders Levermann, head of Research Department Complexity Science at the Potsdam Institute and co-author of the study. 

The countries least responsible for climate change are predicted to suffer income loss that is 60 per cent greater than the higher-income countries and 40 per cent greater than higher-emission countries. They are also the ones with the least resources to adapt to its impacts, he said. 

"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. We must cut down our emissions drastically and immediately; if not, economic losses will become even bigger in the second half of the century, amounting to up to 60 per cent of the global average by 2100," Wenz said. 

"It is on us to decide structural change towards a renewable energy system is needed for our security and will save us money. Staying on the path we are currently on will lead to catastrophic consequences. The temperature of the planet can only be stabilized if we stop burning oil, gas, and coal,” Levermann said. 

Global average temperatures have risen by more than 1.1 degrees Celsius since 1850, exacerbating climate impacts, with 2023 being the hottest on record. 

The greenhouse gases spewed into the atmosphere, largely due to the burning of fossil fuels since the start of the Industrial Revolution, is closely tied to it. 

According to the World Meteorological Organization's "State of the Global Climate 2023" report, greenhouse gas levels, surface temperatures, ocean heat and acidification, and sea level rise all reached record highs in 2023. 

Climate science says the world needs to slash CO2 emissions by 43 per cent by 2030 to limit the average temperature rise to 1.5 degrees Celsius, the guardrail to prevent worsening of climate impacts. 

The business-as-usual scenario will take the world to a temperature rise of around 3 degrees Celsius by the end of the century, scientists have warned.