Damage by Climate Change may Cost $38 Trillion Annually by 2050

A study backed by the German government has found that the damage caused by climate change to infrastructure, farming, health, and productivity will cost around $38 trillion annually by 2050. The figure is almost certain to rise, no thanks to the activities of humans which are emitting more greenhouse gases into the atmosphere.

The study presented by the Potsdam Institute of Climate Impact Research (PIK) is one of the foremost studies to estimate the economic impact of climate change, which has often been a source of controversy among economists. According to the study, climate change will wipe off 17% of the global economy’s GDP by 2050.

“The world population is poorer than it would be without climate change,” said Leonie Wenz, co-author of the study and Potsdam climate data researcher. “It costs us much less to protect the climate than not to.”

The cost of mitigating climate change is 6 times less than the potential damage

It is estimated that the cost of measures to bring global warming to within 2 degrees Celsius of pre-industrial temperatures by 2050 is $6 trillion. That is less than one-sixth of how much damage climate change will do by the middle of the century if no action is taken to keep global warming below 2 degrees Celsius. 

Previous studies claimed that the economies of some countries could benefit from climate change. However, the PIK’s study found that virtually all economies will suffer the negative consequences of climate change while poorer, developing nations would be the hardest hit.

PIK’s study estimated the damage based on projected temperature and rainfall trends. However, the study failed to account for extreme weather or climate-related disasters like rising sea levels and forest fires. 

The study also based its estimates on the emissions already released notwithstanding the persistent rise of global emissions at record levels.

Governments are not doing enough to fight climate change

While several resolutions have been made over the years at COP, governments are not matching words with financial obligations. At the moment, governments are under-spending on measures to combat climate change.

In the PIK study, researchers surveyed rainfall and temperature data for over 1,600 regions over the last 40 years and estimated the costliest events. Furthermore, they used the damage assessment, together with climate model projections, to estimate future damage.

The PIK finding suggests that if global emissions continue at today’s rate, the average global temperature will climb beyond 4 degrees Celsius and the estimated economic impact after 2050 would be a 60% income loss by 2100. However, by keeping the global temperature below 2 degrees Celsius, the losses will average at 20%.