Costing the Earth – Climate damage Cost and GDP
In a unique new report, CDP has worked with University College London (UCL) Energy Institute to help us understand the potential costs to global Gross Domestic Product (GDP) of failing to realize a 2 degrees Celsius aligned scenario.
The report models the mean damage costs of ‘business as usual’ action on climate change at $5.4 trillion USD a year by 2070 and $31 trillion USD a year by 2200. Accounting for these damages will lead to a 10% reduction in GDP growth rate by 2050 and 25% by 2100.
The report outlines how costs resulting from natural disaster remediation, mass climate-related migration, increased healthcare demands and shortages of key commodities – all resulting from the climate and nature crises- will impact global GDP in the coming decades. Also assessed are the costs of transitioning energy systems and adapting business operations to heat stress – particularly agriculture. A business-as-usual scenario of 4.4C of temperature increase since the industrial revolution is considered alongside the Paris Agreement’s less ambitious 2C trajectory.
Acoording to the report, in the Reference scenario, all individual climate change impacts produce a loss on global GDP. The impact of sea level rise is marginal at the global level. While the negative impact of agricultural productivity declines overtime, the impact of heat stress on labour productivity increases overtime and more than offsets the positive impacts of CO2 fertilization and warmer
conditions in temperate regions.
Figure: Changes in global GDP in the Reference scenario considering different types of impacts in ENGAGE (analysed
as one impact at a time)
See the full report here