In a report published by climate research provider CDP and University College London (UCL), the organizations outlined the massive costs of inaction on climate change, including a 10% reduction in GDP growth rates by 2050 and 25% by 2100. CDP and UCL modelled the costs of continuing in a “business as usual” model, estimating they will reach $5.4 trillion a year by 2070 and $31 trillion a year by 2200.
The organizations stated that the publication of their model comes among limited attempts to date to embed climate-related risks into mainstream macro-economic indicators. The report compared the impacts of two comprehensive end-of-century climate models, including a Paris-aligned 2°C scenario, and a ‘business as usual’ 4.4° C scenario. The organizations noted that even under the Paris-aligned model, damage costs would reach US$1.8 trillion by 2070, but would plateau afterwards.
In addition, the report highlights significant differences in the damage costs of climate change by region and sector. For example, the modelling found that in agriculture, regions including India and Africa would see significant negative impacts, while temperate regions would experience net benefits.
Carole Ferguson, Head of Investor Research at CDP, said:
“The impact of climate change on GDP varies significantly between regions, with developing economies such as India suffering the most. Given the potential scale of damage costs and the implications for disruption in the global system, economic actors cannot just wait for the right regulatory policies to be put into place. Policy makers, corporates and the financial system, which will be impacted, should be proactive in investing in mitigation and adaptation to avoid these high damage costs.”
Dr Gabrial Anandarajah, Associate Professor from the UCL Energy Institute, said:
“In evaluating the impacts of climate change on GDP, we have attempted to overcome the limitations of a single model by using three different models developed at the UCL Energy Institute and the UCL Institute for Sustainable Resources. Three multi-region global models have been used to estimate economic and non-economic costs of climate change on various economic sectors”.