Tackling Climate Crisis Will Boost Economic Growth, While Inaction Could Cause ‘Permanent Recession,’ Researchers Say

Tackling the climate crisis with bold action will increase nations’ economic growth instead of damaging it as net-zero policy critics have claimed, according to new research from the Organisation for Economic Co-Operation and Development (OECD) and the United Nations Development Programme (UNDP).

Ambitious goals and implementing policies to reduce greenhouse gas emissions would lead to a net gain in gross domestic product (GDP) worldwide by 2030, the report said.

“Climate action has gained momentum over the past decade, driving real economic opportunities. However, current efforts are not keeping pace with rising risks. Our planet is dangerously close to crossing the 1.5˚C temperature guardrail, and current actions are not far or fast enough to prevent the worst impacts of climate change. Countries remain reluctant to scale up their climate actions and ambitions, fearing harm to their economies. This jeopardises the future of both our planet and its people,” a press release from OECD said.

The net gain to the global economy is projected to be 0.23 percent by 2040, but increases the following decade if emissions are reduced.

“The overwhelming evidence that we now have is that we are not regressing if we invest in climate transitions. We actually see a modest increase in GDP growth, that may look small at first… but quickly grows,” said UNDP Executive Secretary Achim Steiner at the Europe 2025 Conference in Berlin on Tuesday, as The Guardian reported.

The world’s most advanced economies would see a gain of 60 percent in per capita GDP from 2025 levels by mid-century, with lower-income nations experiencing a 124 percent rise.

Developing countries would also benefit in the shorter term if governments invested in reducing emissions, with 175 million people no longer being in poverty by 2030.

However, if the climate crisis continues unabated, a third of the world’s GDP could be lost by 2100.

“Climate action is losing momentum, while accelerating it is needed to secure prosperity. Mounting economic uncertainty, geopolitical tensions and rising public debts are shifting priorities and straining government budgets, particularly for climate,” the press release said.

Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, on Wednesday warned that the climate could plunge Europe into a “permanent recession” if the climate crisis is not addressed head-on.

“From unprecedented storms hitting Europe’s west coast and heatwaves, to droughts in Sicily and floods across central Europe, climate-driven disasters are slashing food production and destroying infrastructure, businesses, homes and communities,” Stiell said in a speech in Berlin. “And the climate crisis could carve up to 2.3% off Europe’s GDP by mid-century – a recipe for permanent recession, meaning continuously shrinking economies, failing businesses, and significantly increased unemployment.”

New and more ambitious Nationally Determined Contributions (NDCs) were due last month, but just 19 countries submitted their updated NDCs by that time.

“Any slowdown in climate action risks delaying much-needed investments, weakening economic resilience and increasing climate damages. The cost of insufficient action is clear: it could threaten future development, economic stability and long-term prosperity,” the press release said. “As nations prepare their next round of climate commitments with their Nationally Determined Contributions (NDCs), now is the opportunity to change this trajectory.”

The new analysis shows that increased “climate ambition” is both achievable and makes economic sense in the near-term and for the future.

“The 2025 NDC cycle is an opportunity to build collaborative approaches around climate, development and growth priorities, broaden and strengthen ownership of development-enhancing mitigation strategies, and inform effective investment plans and strategies to mobilise public and private sources of finance to deliver action,” the press release said.