Study Finds that Climate Damage May Cost $38 Trillion a Year by 2050
A recent study conducted by Germany's Potsdam Institute for Climate Impact Research (PIK) has projected that climate change damage will cost approximately $38 trillion annually by 2050. The study indicates that the impacts of climate change will be felt globally, with the most significant effects being in countries that have contributed the least to the climate crisis.
The study, published in the journal Nature, assesses the economic commitment of climate change and how it will impact future economic growth. Researchers analyzed 40 years of data from over 1,600 regions across the world and found that the severity of the impacts is expected to increase as humans continue to burn fossil fuels.
The study suggests a range of economic damages from $19 to 59 trillion by mid-century, mainly due to rising temperatures, but also influenced by changes in rainfall and temperature variations. Weather extremes such as wildfires and storms could further exacerbate the economic costs.
The study revealed that the projected economic damages from climate change in the next 25 years are six times higher than the costs of mitigating global warming and limiting it to 2°C above preindustrial levels.
The researchers studied how climate change is projected to affect daily temperature variability, total annual precipitation, the annual number of wet days, and occurrences of extreme daily rainfall, alongside the shifts already noted due to changing average temperatures.
The study concluded that the economic effects of climate change are likely to persist much longer than earlier research has indicated. The research may underestimate the economic toll of climate change since it does not factor in the effects of sea level rise, stronger hurricanes, heat waves, human health issues, and other costly factors.
The study indicates that the greatest economic losses will likely occur in warmer regions, with countries least responsible for historical emissions bearing a disproportionate share of economic damages. However, the United States and European Union would also experience notable impacts, with per capita income rising but at a slower pace than would be the case without climate change. In the short term, northern latitudes could see net economic benefits purely from a numerical perspective.
A key takeaway from the study is the urgency of making substantial, immediate emissions reductions to avoid even larger economic losses after mid-century. On average, individuals could lose 19% of their income by midcentury compared to a scenario without human-induced climate change. This means many places would still see income growth, but at a slower pace and to a lower extent than otherwise expected.
