The effects of climate change are set to have a significant impact on the world’s Gross Domestic Product (GDP) by 2100, according to a new study. Extreme weather events and reduced productivity due to higher temperatures are among the factors responsible for the decline. A previous study by the University of Cambridge in 2019 had already shown that even northern industrialized countries like Germany would be affected by the economic consequences of climate change. The new study, conducted by scientists from the London Imperial College, the London School of Economics (LSE), the University of Cambridge, and ETH Zurich, reveals that the economic costs of climate change are even higher than previously thought. The study, published in the Environmental Research Letters journal, suggests that global GDP could fall by 37% due to climate change by the end of this century.
The predicted decline of 37% is an average of different scenarios, with GDP expected to fall between 6% and 51%. This is six times higher than previous estimates, which had assumed that the effects of climate change, such as floods, fires, and droughts, would only have a short-term impact on economic growth. However, economists now believe that economies will only slowly recover from extreme events and their damages. The authors of the study also suggest that higher temperatures will reduce productivity, further impacting GDP. If GDP does indeed fall by 37% by 2100, this means that every ton of CO2 emitted will cause damage of more than $3,000, significantly higher than the EU’s current CO2 price of €60 per ton. “The results show that it is cheaper to reduce greenhouse gas emissions than to deal with the consequences of climate change,” says Paul Waidelich.
The study highlights the urgent need for action to reduce greenhouse gas emissions and mitigate the effects of climate change. The economic consequences of inaction are severe, and the costs of reducing emissions are far lower than the costs of dealing with the aftermath of extreme weather events. The study also emphasizes the need for international cooperation to address the global challenge of climate change.
