Climate change: costs hit everyone

Climate change could cost the world economy seven percent of global per capita income

The climate impacts of unchecked warming harm the entire world economy - even for the rich countries of temperate latitudes it will be expensive. © Leolintang / iStock
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It will be expensive: if climate change continues unabated, its consequences will cost mankind by the year 2100 a good seven percent of global per capita income. However, this does not only affect the poor, tropical countries, but also many rich, supposedly climatically favored states, as researchers have determined. Thus, even small deviations from the historical mean temperature bring economic losses.

Whether it's drought-related crop failures, floods caused by sea-level rise, damage caused by fire and storms, or infrastructure damage from thawing permafrost: the negative consequences of climate change are already being felt all over the world. But who will be the hardest hit? So far, the views differ: some studies predict high costs for rich countries such as the US, while others see even for countries in cooler climates, even economic benefits.

Historical climate standard as optimum

Which countries will actually pay for climate change and how much has now been determined by Matthew Kahn of the University of Southern California and his colleagues. For their study, they developed an economic-mathematical model that shows how the gross domestic product (GDP) changes in the long term if the temperatures deviate from the long-standing historical norm. Output data were economic and climate data from 174 countries from 1960 to 2014. For the forecast until 2100, the researchers assumed a scenario with unchecked warming (RCP 8.5) and one with reaching the Paris climate targets.

The evaluations showed that in recent decades repeated or prolonged temperature deviations from the historical norm have led to economic losses in many countries. In concrete terms, the researchers calculated that per 0.01 degree of annual deviation from the long-term average, income grew by 0.054 percent per year. "Ongoing changes in the climate have a clear negative long-term impact on economic growth, " the researchers said. "The economics of climate change far outweigh the effects on crops."

Unconditional warming implies a decline in GDP per capita in 2100 countries in per cent. Kahn et al. / National Bureau of Economic Research

Losses are inevitable but the height varies

But what does this mean for the future? According to researchers, unchecked climate change could cause global economic losses of seven percent of global per capita income. "Timely adaptation to the climate impacts could mitigate these negative long-term effects. But it is very unlikely that it can completely compensate them, "the scientists emphasize. display

If, on the other hand, it were possible to meet the climate goals of a maximum of two degrees of warming, this would entail costs in the short term. However, the long-term economic losses due to climate change sink to only 1.05 percent by 2100, the researchers report. "If the developed nations wanted to avert greater economic damage in the coming decades, the Paris Climate Agreement would be a good start, " says co-author Kamiar Mohaddes of the University of Cambridge.

Buy also for rich, cool countries

However, not only the poor, tropical countries would be affected by these losses: "These negative effects are universal they hit all countries, whether rich or poor, warm or cold", emphasize the researchers. According to their calculations, the gross domestic product of all countries will decrease by 0.5 to 1.20 per cent by 2030. By the year 2100, these losses will increase to between 4.35 and 10.52 percent.

In concrete terms, the United States' gross domestic product could shrink by 10.5 percent by 2100, and that of Japan, India and New Zealand by ten percent, as Kahn and his team determined. Russia has to reckon with losses of nine percent, the EU and China could still lose between four and five percent of their GDP. Even rich Switzerland would not get away with it on the contrary, their income could even fall by twelve percent.

"The idea that rich, temperate nations are economically immune to, or even able to benefit from, climate change is simply not plausible in the light of these findings, " says Mohaddes. (NBER Working Paper No. 26167, 2019; doi: 10.3386 / w26167)

Source: University of Cambridge, National Bureau of Economic Research

- Nadja Podbregar