admin Climate change could be significantly more damaging for the world economy than previously thought. Even a one-degree Celsius rise in temperature could potentially result in as much as a 12 per cent reduction in global GDP, or about six times more than previous estimates, a new study has concluded.
The study by two economists, Adrien Bilal of Harvard University and Diego Kanzig of Northwestern University in the United States, states that the world could see “precipitous declines” in outputs, capital, and consumption if the temperature is allowed to increase unabated to reach the predicted three-degree Celsius rise by the end of the century.
“A 1 degree Celsius increase to global mean temperature (from current levels) leads to a gradual decline in world GDP that peaks at 12 per cent after six years and does not fully mean-revert even 10 years after the shock,” the authors say in the study.
Global GDP in the year 2022 was calculated to be about 100 trillion US dollars.
The global mean temperature has already gone up by about one degree Celsius from pre-industrial times (the average of the 1850-1900 period). The study discusses the economic impacts of temperature rise from current levels.
The authors state that their estimates of the shock of temperature rise on economic activities are larger than previous calculations, primarily because they rely on new datasets that better capture the changes in global mean temperatures. Previous studies had based their findings on country-level changes in temperatures and not on the global rise in temperature, the authors explain.
It turns out that global temperature has much more pronounced impacts on economic activity than local temperature… The estimated effects of global temperature shocks are about seven times larger than for local temperature shocks, based on the same empirical model and the same sample period,” the study says.
“Global temperature shocks predict a large and persistent rise in extreme climatic events that cause economic damage — extreme temperature, extreme wind, and extreme precipitation. By contrast, local temperature shocks predict a much weaker rise in extreme temperature, and barely any rise in extreme wind speed and precipitation. This conclusion is consistent with the geoscience literature — extreme wind and precipitation are outcomes of the global climate that depend on ocean temperatures and atmospheric humidity throughout the globe, rather than outcomes of idiosyncratic local temperature realizations,” it says.
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