The Economic Impact of Climate Change

The worldwide economy is supposed to lose around 19% of income in the next 25 years because of environmental change, with nations least responsible for the issue and having the least resources to adapt to impacts suffering the most, as per the new study published.

The study by researchers at Germany's Potsdam Institute for Climate Impact Research said environmental effects could cost the global economy around $38 trillion a year by 2049.

"Our analysis shows environmental change will cause massive financial damage within the next 25 years in almost all nations all over the world, also in highly developed ones like Germany, France, and the US," said researcher Leonie Wenz who led the study published in the journal Nature.

South Asia to be affected

South Asia and Africa will be strongly impacted, said Maximilian Kotz, another scientist.

The scientists took detailed weather and economic information from more than 1,600 regions globally, covering the most recent 40 years.

They said global income loss could vary between 11% and 29%, depending upon various environmental scenarios and uncertainties in the information.

The predicted loss is massive and already about six times more than whatever it would cost to reduce carbon emissions to keep the typical temperature rise below two degrees Celsius, the researchers said.

These economic damages are generally because of rising average temperatures. However, when the scientists also thought to be different factors like rains and storms, the anticipated economic damages increased by around 50% and fluctuated more starting from one region to the other.

Regions nearest to the equator to be hit

While most regions on the planet are supposed to suffer economically because of these changes, they said regions close to the poles could see advantages because of less temperature variability.

On the other hand, the hardest-hit regions will probably be those nearer to the equator, which generally have contributed less to global emissions and at present have lower incomes.

"Our study features the significant disparity of environmental impact: We find damages almost everywhere, however, nations in the tropics will experience the most because they are as of now warmer. The further temperature increase will subsequently be unsafe there," said Anders Levermann, head of Research Department of Complexity Science at the Potsdam Institute and co-author of the study.

The nations least responsible for environmental change are predicted to suffer income loss that is 60% greater than the higher-income nations and 40% greater than higher-emission nations. They are also the ones with the least resources to adapt to its effects, he said.

"These near-term damages are a consequence of our past emissions. We will require more transformation efforts if we avoid at least some of them. We need to cut down our emissions drastically and immediately; if not, economic losses will turn out to be considerably greater in the second half of the century, adding up to 60 percent of the worldwide normal by 2100," Mr. Wenz said.

"It is on us to choose: an underlying change towards a renewable energy system is required for our security and will save us money. Staying on the path we are currently on will lead to catastrophic outcomes. The temperature of the planet must be stabilized if we stop burning oil, gas, and coal," Mr. Levermann said.

Average temperatures

Global average temperatures have climbed by more than 1.1 degrees Celsius beginning around 1850, intensifying environmental impacts, with 2023 being the hottest on record.

The greenhouse gases spewed into the air, generally because of the burning of petroleum products starting from the beginning of the Industrial Revolution, are intently tied to it.

As per the World Meteorological Organization's "Stae of the Global Climate 2023" report, greenhouse gas levels, surface temperatures, ocean heat and acidification, and sea level rise all reached record highs in 2023.

Climate science says the world needs to slice CO2 emissions by 43% by 2030 to restrict the average temperature increase to 1.5 degrees Celsius, the guardrail to forestall the deteriorating of environmental impact.

The business-as-usual scenario will take the world to a temperature climb of around three degrees Celsius before the end of the century, researchers have cautioned.