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A new study has found that almost 24% of global GDP could be lost by 2100 without significant mitigation and adaptation efforts under high greenhouse gas emissions. The researchers predicts that hotter, lower-income countries will be the most impacted, losing an additional 30 to 60% of their GDP.
The University of Cambridge-led study also suggests that adhering to the Paris Agreement goals could result in a 0.25% global income gain, compared to scenarios where global emissions continue to follow current trends.
Previous studies have investigated how climate change outcomes may impact economic activity, but estimates often vary dramatically due to the use of different climate models and other methodological differences.
“While the physical manifestations of climate change are visibly alarming, its macroeconomic implications are equally significant but difficult to quantify,” write the authors.
The researchers compared future temperature projections from the International Panel on Climate Change’s (IPCC) Shared Socio-economic Pathways and compared these against 2 baselines: temperatures keep increasing in in line with their historic trends (1960 to 2014) and a hypothetical scenario with “no further warming”.
They then assessed the impact on the annual GDP per capita losses of 174 countries.
The results show that if global average temperatures rise by 0.04°C per year, global GDP per capita may drop by 10 to 11% by 2100. When accounting for natural climate variability, this figure rises to 12 to 14%.
Abiding by the Paris Agreement goals would limit temperature increases to 0.01°C per year.
“Go back less than a decade and most economists would argue that climate change was something that only hotter, southern countries needed to worry about,” says Kamiar Mohaddes and Mehdi Raissi, the authors of the study from the University of Cambridge.
But their results suggest otherwise.
When compared to a no further warming scenario, the researchers found that a 20 to 24% capita income loss would be expected in the most extreme emissions scenario, with the burden falling on all countries, not just those with warm climates.
“We have challenged this assumption,” says Mohaddes and Raissi.
“We have shown that climate change reduces income in all countries, hot and cold, rich and poor alike, and will affect industries ranging from transport to manufacturing and retail, not only agriculture and other sectors commonly associated with nature.”
While lower-income countries located in hotter climates face higher losses of around 30 to 60% above the global average, the study showed that countries in colder climates are not unaffected.
“No country is immune from the impact of climate change if greenhouse gas emissions are not curtailed,” say the authors.
They add that their findings emphasise the importance of mitigating climate change and implementing adaptation measures to minimise its negative effects.
“However, even with adaptation policies, the long-term growth effects of climate change are likely to persist, particularly in countries with hotter climates and lower incomes.”
The results have been published in PLOS Climate.