A recent study has revealed that climate change could be far more harmful to the global economy than previously believed. The research suggests that even a one-degree Celsius rise in global temperature could reduce the world’s GDP by up to 12%, which is six times higher than earlier estimates.
The study was conducted by Adrien Bilal from Harvard University and Diego Kanzig from Northwestern University. They predict that if the global temperature increases by 3 degrees Celsius by the end of the century, there could be dramatic declines in economic output, capital, and consumption worldwide.
Gradual Decline in Global GDP
As per the study, a degree Celsius increase in the global average temperature from current levels could lead to a gradual decrease in the world GDP, peaking at a 12% reduction after six years. The economy would not fully recover even ten years after this temperature rise. For context, the global GDP in 2022 was approximately 100 trillion US dollars.
The global mean temperature has already risen by about one degree Celsius since pre-industrial times (the average from 1850-1900). The study highlights the economic impacts of further temperature increases from these current levels.
The authors state that their estimates are higher than previous ones because they used new datasets that better capture changes in global mean temperatures. Earlier studies focused on country-level temperature changes rather than the overall global temperature rise.
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The study finds that global temperature increases have a much larger impact on economic activity than local temperature changes. Especially, the effects of global temperature shocks are about seven times greater than those of local temperature shocks.
Global temperature shocks lead to a significant and persistent increase in extreme weather events, such as extreme heat, high winds, and heavy precipitation, which cause substantial economic damage. In contrast, local temperature changes result in much weaker increases in extreme weather events.
The study also found that if global mean temperatures had not risen by about 0.75 degrees Celsius between 1960 and 2019, the per capita world GDP would be 37% higher today.
The researchers’ calculations include not just the damages from extreme weather events and the costs of rebuilding but also a ‘social cost of carbon.’ This includes the expected slowdown in productivity due to rising temperatures and climate change.
This study provides a stark warning about the economic dangers of unchecked climate change. It underscores the urgent need for global action to mitigate temperature rises and limit their impact on the economy globally.
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