Climate crisisClimate Change to Shrink Global Economy
Prevailing economic research anticipates the burden of climate change falling on hot or poor nations. Some predict that cooler or wealthier economies will be unaffected or even see benefits from higher temperatures. A new study, however, suggests that virtually all countries – whether rich or poor, hot or cold – will suffer economically by 2100 if the current trajectory of carbon emissions is maintained: 7 percent of global GDP will disappear by 2100 as a result of business-as-usual carbon emissions – including over 10 percent of incomes in both Canada and the United States.
Prevailing economic research anticipates the burden of climate change falling on hot or poor nations. Some predict that cooler or wealthier economies will be unaffected or even see benefits from higher temperatures.
However, a new study co-authored by researchers from the University of Cambridge suggests that virtually all countries – whether rich or poor, hot or cold – will suffer economically by 2100 if the current trajectory of carbon emissions is maintained.
Cambridge says that, in fact, the research published on Monday by the National Bureau of Economic Research suggests that – on average – richer, colder countries would lose as much income to climate change as poorer, hotter nations.
Under a “business as usual” emissions scenario, average global temperatures are projected to rise over four degrees Celsius by the end of the century. This would cause the United States to lose 10.5 percent of its GDP by 2100 – a substantial economic hit, say researchers.
Canada, which some claim will benefit economically from temperature increase, would lose over 13 percent of its income by 2100. The research shows that keeping to the Paris Agreement limits the losses of both North American nations to under 2 percent of GDP.
Researchers say that 7 percent of global GDP is likely to vanish by the end of the century unless “action is taken”. Japan, India and New Zealand lose 10 percent of their income. Switzerland is likely to have an economy that is 12 percent smaller by 2100. Russia would be shorn of 9 percent of its GDP, with the UK down by 4 percent.
The team behind the study argue that it isn’t just about the number on the thermometer, but the deviation of temperature from its “historical norm” – the climate conditions to which countries are accustomed – that determines the size of income loss.
“Whether cold snaps or heat waves, droughts, floods or natural disasters, all deviations of climate conditions from their historical norms have adverse economic effects,” said Dr Kamiar Mohaddes, a co-author of the study from Cambridge’s Faculty of Economics.
