Climate Damage Costs Could Total $38 Trillion per Year by 2050, Study Finds

Climate change damage worldwide will cost approximately $38 trillion annually by 2050, according to a new study by Germany’s Potsdam Institute for Climate Impact Research (PIK).

The impacts will be felt all over the world, but will most affect countries that have contributed the least to the climate crisis.

“Our study highlights the considerable inequity of climate impacts: We find damages almost everywhere, but countries in the tropics will suffer the most because they are already warmer. Further temperature increases will therefore be most harmful there. The countries least responsible for climate change are predicted to suffer income loss that is 60% greater than the higher-income countries and 40% greater than higher-emission countries. They are also the ones with the least resources to adapt to its impacts,” said co-author of the study Anders Levermann, PIK’s head of research department complexity science, in a press release from PIK.

The study, “The economic commitment of climate change,” was published in the journal Nature.

“Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly-developed ones such as Germany and the U.S., with a projected median income reduction of 11% each and France with 13%,” said study co-author Leonie Wenz, a PIK climate scientist and economist, as The Associated Press reported.

The severity of the impacts will almost definitely increase as humans continue to burn fossil fuels, reported Reuters.

“These near-term damages are a result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. And we have to cut down our emissions drastically and immediately – if not, economic losses will become even bigger in the second half of the century, amounting to up to 60% on global average by 2100. This clearly shows that protecting our climate is much cheaper than not doing so, and that is without even considering non-economic impacts such as loss of life or biodiversity,” Wenz said in the press release.

The research team used empirical models along with climate simulations and also examined the persistence of climate impact effects on the past economy. In assessing how changing climatic conditions would affect future economic growth, the researchers looked at 40 years worth of data from more than 1,600 regions across the world.

“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,” said Maximilian Kotz, a PIK climate scientist and first author of the study, in the press release.

The range of economic damages is estimated to be from $19 to 59 trillion by mid-century. The cause will mainly be rising temperatures, with additional impacts from rainfall changes and variations in temperature. Additional weather extremes like wildfires and storms could also increase the economic costs.

“[W]e find that the world economy is committed to an income reduction of 19% within the next 26 years independent of future emission choices,” the researchers wrote in the study. “These damages already outweigh the mitigation costs required to limit global warming to 2°C by sixfold over this near-term time frame and thereafter diverge strongly dependent on emission choices.”

Levermann emphasized the need for a rapid shift away from fossil fuels.

“It is on us to decide: structural change towards a renewable energy system is needed for our security and will save us money. Staying on the path we are currently on will lead to catastrophic consequences. The temperature of the planet can only be stabilized if we stop burning oil, gas and coal,” Levermann said in the press release.

Wenz said the extent of the inequity of the impacts was unexpected.

“It’s devastating,” Wenz said, as The Guardian reported. “I am used to my work not having a nice societal outcome, but I was surprised by how big the damages were. The inequality dimension was really shocking.”