In a startling reveal from a recent scientific study, the global economy is poised to suffer a significant blow due to climate change, with a projected income drop of around 19% within the next quarter of a century. The findings, published on Wednesday, underscore an especially grim future for countries at a disadvantage both in their contribution to climate change and their capacity to weather its impacts.
The research, conducted by the Potsdam Institute for Climate Impact Research in Germany, forecasts climate change-induced damages costing the world approximately $38 trillion annually by 2049. The study’s lead, Leonie Wenz, stated that the economic repercussions are expected to be widespread, affecting countries at every development level, including those with advanced economies like Germany, France, and the United States.
“The economic struggles we foresee due to climate change won’t discriminate—almost all countries are on the brink of experiencing substantial financial loss. Developed nations aren’t exempt; everyone stands to suffer,” said Leonie Wenz.
Regions in South Asia and Africa are predicted to be especially vulnerable, as noted by Maximilian Kotz, another researcher involved in the study. Upon examining extensive weather-related and economic data from over 1,600 regions worldwide spanning four decades, the team found that global income losses could oscillate between 11% to 29% by 2049, with the range dependent on various climate scenarios and data uncertainties.
The cost associated with the predicted losses is staggeringly more than what it would take to reduce carbon emissions sufficiently to keep the temperature increase under the two degrees Celsius benchmark. This comparison highlights the dire necessity for action against climate change.
Predictably, the primary culprit behind these economic damages is the rise in average temperatures. Yet, the study suggests that incorporating other factors—such as increased precipitation and heightened storm frequency—into calculations, could raise projected economic damages by an additional 50% and result in even greater regional disparities.
While some regions might incidentally benefit from these changes, particularly areas near the poles with less temperature variability, those situated closer to the equator, which historically have lower contributions to global emissions and income levels, will likely absorb the hardest hits.
“Our research brings to light a harsh reality of climate inequality,” stated Anders Levermann, Co-Author and head of Research Department Complexity Science at the Potsdam Institute. “We’re seeing potential damages nearly everywhere, but it’s the tropical countries that will bear the brunt of it due to their already warmer climates. Any further temperature increases will disproportionately affect these regions.”
Moreover, lower-income countries, which are the least culpable for climate change, could face an income loss roughly 60% greater than that of wealthier nations and 40% more than those with higher emissions levels. These countries also grapple with limited resources to adapt to the changing climate.
“These near-term repercussions are the legacy of our historical emissions. We can avoid some of the damage with increased adaptation efforts. However, without a drastic and immediate reduction in our emissions, we’re looking at even more severe economic losses later in the century—possibly up to 60% of the global average by 2100,” Wenz explained.
“It’s within our control—we can choose to transition towards a sustainable, renewable energy system which is not only essential for our safety but financially prudent. Conversely, maintaining our current course is bound to have catastrophic outcomes,” added Levermann.
The study’s publication comes at a time when the effects of climate change are more evident than ever. Global average temperatures have climbed more than 1.1 degrees Celsius since 1850, with the year 2023 being marked as the hottest on record. These temperature rises, driven largely by greenhouse gas emissions resulting from burning fossil fuels since the Industrial Revolution, are tied closely to the worsening of climate impacts.
This past year, according to the World Meteorological Organization’s “State of the Global Climate 2023” report, saw all-time highs in greenhouse gas concentrations, surface temperatures, ocean heat content and acidification, alongside sea level rise.
Climate science has drawn a clear line: to limit the average temperature rise to a manageable 1.5 degrees Celsius, CO2 emissions need to be slashed by 43% by 2030. Failing to do so, as scientists caution, will lead the world towards an ominous three degrees Celsius temperature increase by the century’s end. The choice of path today will have lasting repercussions on the economy and the planet’s future.
