Climate change could reduce global income by one fifth by 2050

Climate change caused by already emitted greenhouse gases will reduce global GDP by about 20% by 2050, regardless of how aggressively humanity reduces carbon dioxide emissions. This is the warning from researchers in a new study published in the scientific journal Nature.

The economic consequences of global warming could escalate to tens of trillions of dollars per year by 2100 if the planet warms significantly more than two degrees compared to the mid-1800s, according to the study.

The Earth’s average temperature has already risen by 1.2 degrees, leading to intensified heat waves, droughts, floods and tropical storms made more destructive by rising sea levels. But rapid reductions in greenhouse gas emissions are still crucial to avoid even worse economic effects during the second half of the century, the researchers emphasize.

It is mainly tropical countries, many of which already have shrinking economies due to climate damage, that will be hit hardest. These countries, which bear the least responsibility for global warming, are expected to see an income loss that is 60% greater than high-income countries and 40% greater than higher-emitting countries. But even rich countries like Germany, the US and France are expected to see incomes fall by 11-13% by 2050.

The researchers based the forecasts on four decades of economic data and climate data from 1600 regions, instead of country-level statistics. This made it possible to include damages that previous studies had overlooked, such as extreme rainfall.

Unavoidable damages are expected to reduce the global economy’s GDP by 17% in 2050 compared to a scenario without further climate impact after 2020. Despite this, the calculations may be conservative, as they do not include damages from other extreme weather events.

The study is a clear warning signal about the enormous economic consequences of climate change, even if we act now to reduce emissions. It is frightening to imagine what could happen if global warming continues at an even faster pace.

The report also shows the great injustice in how the economic burdens of climate change are distributed. The poorest countries, which bear the least responsibility for the climate crisis, will be hit by far the hardest.

Although the calculations may be conservative, the study provides an important insight into what we can expect economically if we do not act quickly enough to slow global warming.

However, it is important to reflect on whether our current economic system and prevailing capitalism are really compatible with a sustainable future. Today’s economy is based on constant growth through the exploitation of natural resources, without regard to the fact that we are destroying our planet and its ability to sustain human life.

To truly tackle the climate crisis and avoid a global catastrophe, we need to discuss a comprehensive economic transition that can work within the planet’s boundaries. It is about creating a new economic paradigm that puts people’s and the planet’s well-being at the center, rather than short-term profit and unsustainable growth.

World leaders, decision-makers and companies must embrace the insights from this study and realize that the climate transition is not just an environmental issue but also, to the highest degree, an economic survival issue for humanity. But to manage this transition, small adjustments to the current system are not enough. We need bold new thinking about how we organize our societies and economies to ensure a sustainable and equitable future for all. 

Time is short and the challenge is enormous, but the alternative is simply not an alternative. We have no choice but to act now, before it is too late.

This text was first published on the Climate Emergency website.

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Per-Olof Hall

Writes about health and sustainability, combining unique insights with over 15 years of experience as owner and consultant at PlanetPeople AB.