A typhoon that strikes, say, Taiwan, is bad for Taiwan. It is also bad for anywhere that buys things from Taiwan. Multiply that concept out to the entire world, and supercharge the typhoons and hurricanes and droughts and fires and floods, and you get a potentially enormous macroeconomic hit to the global economy if we can’t get climate change under control.
A study published on Monday in Environmental Research Letters took a new approach to modeling of warming’s economic impacts. Other models, wrote authors led by Timothy Neal of the University of New South Wales in Australia, tend to “assume that weather impacting a single country is all that affects the economy of that country. ” They instead considered global weather conditions: “In effect, we explore whether the interconnectedness of the global economy makes individual countries vulnerable to weather changes that impact other countries.”
The answer is a resounding yes. Under a high-emissions scenario known as SSP5-8.5, which would likely give us around four degrees C of warming, the world loses about 11 percent of global GDP in 2100 when the old models are used; when global weather effects are considered, that leaps to 40 percent. The expectation that some things can just move as temperatures change — agriculture, manufacturing, and so on — may just be a flawed assumption.
“In a hotter future, we can expect cascading supply chain disruptions triggered by extreme weather events worldwide,” Neal told The Guardian. Importantly, the world is not currently on that high-emissions track, with current policy and plans suggesting a better-but-still-catastrophic 2.7 degrees C or so is on the way. Of course, the last year or so has seen some pretty alarming backsliding, with industries abandoning climate pledges and countries failing to increase ambition and one big country in particular abdicating all global climate leadership. And regardless, the point of the study stands: just because one country maybe won’t be the worst hit by increasingly extreme weather, a massive cut to the global GDP won’t spare anyone the economic pain.
Other economic analyses of climate change have generally found relatively big hits to GDP per capita averaged out across the world, but they tend to find that some countries — Canada, Scandinavia, the Baltic states, Mongolia, other generally northern areas — actually increase their GDP as temperatures warm. The new study basically questions that entire premise. Though the authors noted that uncertainties still remain in exactly what significant warming will do to the economy, “the scale of projected economic losses from including global weather is considerable.”
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