Even if CO2 emissions were cut drastically, the world economy is already committed to an income reduction of 19 per cent until 2050 due to climate change, a new study published in Nature finds. Put another way, the cost will be $38tr in damages every year.

These damages are six times larger than the mitigation costs needed to limit global warming to 2C. Based on empirical data from more than 1,600 regions worldwide over the past 40 years, scientists at the Potsdam Institute for Climate Impact Research (PIK) assessed future impacts of changing climatic conditions on economic growth and their persistence.

“Strong income reductions are projected for the majority of regions, including North America and Europe, with South Asia and Africa being most strongly affected. These are caused by the impact of climate change on various aspects that are relevant for economic growth such as agricultural yields, labour productivity or infrastructure,” says PIK scientist and first author of the study Maximilian Kotz. Overall, global annual damages are estimated to be at $38tr, with a likely range of $19-59tr in 2050. These damages mainly result from rising temperatures but also from changes in rainfall and temperature variability. Accounting for other weather extremes such as storms or wildfires could further raise them.”

To date, global projections of economic damages caused by climate change have typically focussed on national impacts from average annual temperatures over long-time horizons. By including the latest empirical findings from climate impacts on economic growth in more than 1,600 subnational regions worldwide over the past 40 years and by focusing on the next 26 years, the researchers were able to project sub-national damages from temperature and rainfall changes in great detail across time and space all the while reducing the large uncertainties associated with long-term projections. The scientists combined empirical models with state-of-the-art climate simulations (CMIP-6). Importantly, they also assessed how persistently climate impacts have affected the economy in the past and took this into account as well.

“Staying on the path we are currently on, will lead to catastrophic consequences. The temperature of the planet can only be stabilised if we stop burning oil, gas and coal,” said Anders Levermann, head of Research Department Complexity Science at the Potsdam Institute and co-author of the study.

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