Thursday, 3 April 2025

Climate Change's Economic Toll Worse Than We Thought

New research reveals we've been drastically underestimating how much climate change will hurt the global economy. Previous forecasts suggested moderate impacts, but our updated models—which account for worldwide ripple effects—paint a far grimmer picture.

The Flaw in Old Models

Past economic projections made two critical mistakes:

  1. They only considered weather impacts within each country

  2. They ignored how extreme weather anywhere affects economies everywhere.


Example: When floods wipe out crops in one country, food prices rise globally. Old models missed these international connections.


The Real Economic Impact

Our corrected analysis shows:


🌡️ At 3°C warming (likely by 2100 at current rates):

  • Global GDP per capita drops 40% (vs. old estimate of 11%)


  • No country escapes harm—even colder regions like Russia lose out


🔥 Key Drivers of Damage:

  • Simultaneous extreme weather (global droughts/floods at once)

  • Broken supply chains

  • Worker productivity losses from heat

  • Mass migration and conflict triggered by climate disasters


The Paris Agreement Gap

Current policies put Earth on track for 2.7°C warming—once seen as an "economic balance" between climate costs and emission cuts. Our research shows:
✅ The true optimal limit is 1.7°C (matching Paris Agreement's ambitious goal)
✅ Every fraction of a degree matters enormously


Why This Matters Now

  • Food inflation is already hitting record highs due to climate-amplified heatwaves

  • 2023 saw $380 billion in global weather disasters


  • Insurance companies are withdrawing coverage from vulnerable areas


As lead researcher Timothy Neal (UNSW Sydney) warns:
"We're gambling with our children's future. The sooner we act, the more suffering we can prevent."

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