Economic Losses from Climate Impacts Could Reach US$38 Trillion, Even with Aggressive Emission Cuts

Climate change is poised to severely impact the global economy, with a study published on April 17, 2024, revealing that global GDP could shrink by US$38 trillion, or nearly 20%, by 2050 due to the effects of CO2 emissions already in the atmosphere. Even with aggressive efforts to reduce carbon pollution, the damage to the economy will be significant.

However, the researchers stress that rapid cuts in greenhouse gas emissions remain critical to prevent even greater economic losses after 2050. The study, published in the journal Nature, highlights the long-term economic fallout from climate change, which could reach tens of trillions of dollars annually by the end of the century if global temperatures rise more than 2°C above pre-industrial levels.

The Earth’s average surface temperature has already increased by 1.2°C, resulting in more frequent and intense heatwaves, droughts, flooding, and tropical storms, all exacerbated by rising sea levels. These climate events are expected to cause widespread economic disruption, particularly in vulnerable regions.

The study’s lead author, Max Kotz from the Potsdam Institute for Climate Impact Research (PIK), emphasized that limiting global warming to below 2°C—an ambitious goal set in the 2015 Paris Agreement—could prevent much of the economic damage. “Staying under the 2°C threshold could limit average regional income loss to 20% compared to 60% in a high-emissions scenario,” Kotz said.

The researchers also found that the cost of annual investments required to keep global warming below 2°C is a small fraction of the economic damages that would be avoided, underscoring the urgency of ambitious climate action to protect both the environment and the global economy.