Climate change could reduce global income by 20% by 2050

By Per-Olof Hall



Climate change caused by greenhouse gases already emitted will reduce global GDP by around 20% by 2050, regardless of how aggressively humanity reduces carbon dioxide emissions. This is the warning from researchers in a new study published in the scientific journal Nature.

Economic Consequences: The Worst-Case Scenarios

The economic consequences of global warming could escalate to tens of trillions of dollars per year by 2100 if the planet warms significantly more than two degrees compared to the mid-19th century, according to the study. The Earth's average temperature has already risen by 1.2 degrees, leading to intensified heat waves, droughts, floods, and tropical storms made more destructive by rising sea levels. But rapid reductions in greenhouse gas emissions are still crucial to avoid even worse economic effects in the second half of the century, the researchers emphasize.

Disproportionate Impact on Tropical Countries

It is primarily tropical countries, many of which already have shrinking economies due to climate damage, that will be hit hardest. These countries, which bear the least responsibility for global warming, are estimated to suffer an income loss 60% greater than high-income countries and 40% greater than higher-emission countries. But even rich countries like Germany, the US, and France are expected to see incomes decline by 11-13% by 2050.

Methodology and Forecasts: A Closer Look

The researchers based the forecasts on four decades of economic and climate data from 1,600 regions, instead of statistics at the country level. This made it possible to include damages that previous studies had overlooked, such as extreme rainfall. Unavoidable damages are expected to reduce global GDP by 17% in 2050 compared to a scenario with no additional climate impact after 2020. Despite this, the calculations may be conservative, as they do not include damages from other extreme weather events.

A Call for Economic Transformation

The study is a clear warning signal about the enormous economic consequences of climate change, even if we act now to reduce emissions. It is frightening to imagine what could happen if global warming continues at an even faster pace. The report also highlights the great injustice in how the economic burdens of climate change are distributed. The poorest countries, which bear the least responsibility for the climate crisis, will be hit the hardest by far. Despite the calculations potentially being conservative, the study provides an important insight into what we can expect economically if we don't act fast enough to slow down global warming.

Reevaluating Our Economic System

However, it's important to reflect on whether our current economic system and the prevailing capitalism are truly compatible with a sustainable future. Today's economy is built on constant growth through the exploitation of natural resources, without regard for the fact that we are destroying our planet and its ability to sustain human life.

To truly tackle the climate crisis and avoid a global catastrophe, we need to discuss a comprehensive economic transformation that can function within the boundaries of our planet. It's about creating a new economic paradigm that puts the well-being of people and the planet at the center, rather than short-term profit and unsustainable growth.

The Path Forward: Bold New Thinking and Action Needed

World leaders, decision-makers, and companies must heed the insights from this study and realize that the climate transition is not just an environmental issue but also, to the highest degree, an economic survival issue for humanity. To succeed, minor adjustments are no longer enough.

We need bold new thinking about how we organize our societies and economies to ensure a sustainable and equitable future for all. Time is short and the challenge is enormous, but the alternative is simply not an option. We have no choice but to act now, before it's too late.




This article was first published in Swedish on Klimatakuten's website and is written by Per-Olof Hall. Per-Olof writes about health, safety, and sustainability, combining unique insights with over 15 years of experience as an owner and consultant at PlanetPeople, Arbetsmiljöakuten, and Klimatakuten.