By 2050, the world will lose $38,000,000,000,000 to climate change, dragging down average income by 19%

The world is already committed to a 19 per cent permanent average reduction in incomes across countries due to warming and consequent changes in climate by 2050, according to a new study published in the journal Nature by scientists from the Potsdam Institute of Climate Impact Research in Germany. 

This is in comparison to a baseline world without climate change. The largest economic losses would be in the lower latitude countries in South Asia and Africa, which have contributed the least greenhouse gas (GHG) emissions and have the lowest present-day incomes. 

This figure is independent of the choices made henceforth regarding GHG emissions from various human activities that have made the planet warmer by at least 1.1 degree Celsius since the pre-industrial period (1850-1900). 

These economic damages from climate change would be annually worth $38 trillion (in 2005 international dollars) in 2049 under a plausible middle-of-the-road GHG emissions scenario, according to the study authors. The range of the economic damages could be anywhere between $19 trillion and $59 trillion.

These damages are six times the cost of mitigation measures that could keep the warming of the planet below 2°C above pre-industrial average by 2050. After 2050, the damages could be much more, depending on the choices the world makes regarding GHG emissions, according to the study.

The study authors conducted their analysis of climate and income data from 1,600 regions over the past 40 years to predict the damages from temperature and precipitation changes at the subnational level. More specifically, the study looked at “changing daily temperature variability, total annual precipitation, the annual number of wet days and extreme daily rainfall that occur in addition to those already identified from changing average temperature”.

The study explained that these criteria have been selected because there is evidence for the impacts of average temperatures on labour and agricultural productivity, the effects of variations in temperature on agricultural productivity and human health and the impacts of precipitation on agricultural productivity, labour outcomes and damages related to floods. 

When only the average annual temperature variable is considered, the income reduction is 13 per cent. This means the rest of the factors contribute 50 per cent of the reduction in income. This shows that the damages from changes in average temperature outweigh all other factors and is going to be the most unprecedented change. “This insight may prove useful in terms of guiding adaptation measures to the sources of greatest damage,” states the study. 

The authors state that the study does not predict future economic growth but calculates the impact of future climatic conditions on the socio-economic predictions made under the various scenarios used by the Intergovernmental Panel on Climate Change (IPCC), known as the Shared Socioeconomic Pathways (SSP).

The study further found that the projected economic damages from climatic changes almost remain the same under all SSPs till 2049, which means that whatever decisions the world takes in reducing greenhouse gas emissions, it is already committed to a reduction in income of 19 per cent. 

The income reductions in North America and Europe would be around 11 per cent (median value) and in South Asia and Africa, the figure could be around 22 per cent (median value), the findings of the report showed.

On average, the poorest countries may have income reductions that are 8.9 percentage points (61 per cent) greater than the richest countries. The countries with the least emissions may have income reductions that are 6.9 percentage points (40 per cent) greater than the countries that have emitted the most GHGs.  

“These patterns re-emphasise the prevalence of injustice in climate impacts in the context of the damages to which the world is already committed by historical emissions and socio-economic inertia,” the authors of the study noted.

For comparison, the study authors also calculated the cost of mitigating climate change till 2050 and found it to be around $6 trillion. They analysed three different integrated assessment models in the Assessment Cycle 6 reports of the IPCC to arrive at the value of mitigation costs but make it clear that it is not a formal cost-benefit ratio analysis. 

“Our simple comparison of their magnitudes makes it clear that damages are actually already considerably larger than mitigation costs and the delayed emergence of net mitigation benefits results primarily from the fact that damages across different emission paths are indistinguishable until mid-century,” the study showed. 

After 2049, the damage costs vary widely across different SSPs, showing the purely economic benefits of taking actions to mitigate the impacts of climate change. 

“Moreover, climate models seem to underestimate future changes in temperature variability and extreme precipitation in response to anthropogenic forcing as compared with that observed historically, suggesting that the true impacts from these variables may be larger,” the authors of the report observed.