Study finds big national disparity in climate change GDP losses

There will likely be significant country-to-country disparity in income losses owing to climate change by 2100, highlighting that while the economic impacts of global warming are negative for all, they are not uniform, says new research co-authored by Kamiar Mohaddes, Associate Professor in Economics and Policy at Cambridge Judge Business School.

The new country-specific study in the journal PLOS Climate builds on prior research by Kamiar and colleagues, and shows that without substantial climate-change mitigation and adaptation efforts global GDP per capita could decline by up to 24% by 2100 under high-emissions climate scenarios.

While the earlier research by Kamiar looked at losses from climate change compared to a baseline under which temperature in each country increases according to its historical trend of 1960-2014, the new study also examines climate change through the lens of a wide range of mitigation, adaptation and temperature volatility scenarios outlined by the Intergovernmental Panel on Climate Change (IPCC). The new study also benchmarks its findings to the commonly adopted baseline in the literature: without climate change and with extremely slow adaptation.

A guide for policymakers and businesses on dealing with climate change

“This research is important because it provides policymakers and businesses with information about the economic effects of climate change that is specific to their individual country,” says Kamiar, who co-authored the study with Mehdi Raissi of the climaTRACES Lab at the University of Cambridge.

“For policymakers, understanding the impact of climate change in their individual countries as opposed to a global impact is obviously quite important in terms of designing policies and institutions that can dampen those negative effects. For businesses, it’s important to understand not only which of the countries they operate in are the most exposed, but also which sectors are most likely to be impacted – be it mining, retail, manufacturing, construction or services.”

Big GDP-loss variation among 174 countries, both hot and cold

The new research looks at 174 countries, finding the income losses vary greatly depending on the projected paths of temperature increases and their variability.

The paper says that countries situated in hotter climates and those classified as low-income will likely face disproportionately higher losses from climate change, from 30% to 60% above the global average.

“This disparity not only highlights the exacerbated vulnerability of these countries but also stresses the need for tailored climate strategies that address their specific challenges,” says the study. “Conversely, countries in colder climates are not spared from the adverse effects of climate change” as the faster rate of temperature increases in these colder climates introduces its own unique challenges.

For example, while the level of temperature in Canada is low, the country is warming up twice as fast as the rest of the world and therefore is being affected by climate change. This includes damage to its physical infrastructure, coastal and northern communities, human health and wellness, ecosystems and fisheries.

A call for further research on country-specific climate risks

“Our findings emphasise the importance of mitigating climate change and implementing adaptation measures to minimise these negative effects,” the study concludes. “However, even with adaptation policies, the long-term growth effects of climate change are likely to persist, particularly in countries with hotter climates and lower incomes. Future research could focus on incorporating these estimated physical climate risks into macro-fiscal frameworks and for effectively informing and guiding country-specific climate action.”