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Concept
Economic impacts of climate change
Summary
The economic impacts of climate change vary geographically and are difficult to forecast exactly. Researchers have warned that current economic forecasts may seriously underestimate the effects of climate change, and point to the need for new models that give a more accurate picture of potential damages. Nevertheless, one 2018 study found that potential global economic gains if countries implement mitigation strategies to comply with the 2 °C target set at the Paris Agreement are in the vicinity of US23 trillion annually by 2050, compared with global economic output without climate change. According to this study, the economies of wealthy countries like the United States would likely shrink by approximately 7% while some developing nations would be devastated, losing around 20% or in some cases 40% of the their economic output.
Global losses reveal rapidly rising costs due to extreme weather events since the 1970s. Socio-economic factors have contributed to the observed trend of global losses, such as population growth and increased wealth. Part of the growth is also related to regional climatic factors, e.g., changes in precipitation and flooding events. It is difficult to quantify the relative impact of socio-economic factors and climate change on the observed trend. The trend does, however, suggest increasing vulnerability of social systems to climate change.
A 2019 modelling study found that climate change had contributed towards global economic inequality. Wealthy countries in colder regions had either felt little overall economic impact from climate change, or possibly benefited, whereas poor hotter countries very likely grew less than if global warming had not occurred.
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