Global Economy to Face an Income Loss of 19 Percent by 2050

April 17, 2024 Hour: 1:12 pm

On Wednesday, the Potsdam Institute for Climate Impact Research (PIK) published a study showing that the global economy faces an income loss of 19 percent by 2050 due to climate change, even if greenhouse gas emissions are drastically reduced immediately.

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Published in the scientific journal Nature, the PIK warns that these losses are six times larger than the cost of the mitigation measures required to limit global warming to two degrees.

Global annual damages are estimated to be around US$38 trillion in 2050, with a likely range of US$19 to 59 trillion. “These damages mainly result from rising temperatures but also from changes in rainfall and temperature variability,” said the study.

The researchers analyzed data from the past 40 years, from more than 1,600 regions, on how weather extremes and changes have influenced economic growth. Next, they calculated how these are likely to affect global economic activity over the next 26 years.

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“Strong income reductions are projected for the majority of regions, including North America and Europe, with South Asia and Africa being most strongly affected,” said PIK scientist and first author of the study Maximilian Kotz.

“These are caused by the impact of climate change on various aspects that are relevant for economic growth such as agricultural yields, labor productivity or infrastructure,” Kotz added.

Last week, the European Union’s Copernicus Climate Change Service said that the year 2024 saw the warmest March ever on record.

The global average temperature has been 1.58 degrees Celsius higher than in the pre-industrial era for the past 12 months, already exceeding the target set out by the Paris Climate Agreement in 2015.

PIK scientist Leonie Wenz, who led the study, stressed that the damage to come in the next few years is a result of greenhouse gases that have already been emitted. Adaptation measures are needed to mitigate these effects.

“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 percent on average globally by 2100,” she pointed out.

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