Man-made climate change is going to cost us, and in more ways than one. According to a new study in the journal Nature Climate Change, if warming reaches 2.5°C (4.5°F), financial assets worth $2.5 trillion will be wiped from existence by 2100. This is a conservative estimate; in a worse-case scenario, this number rises to a jaw-dropping $24 trillion. That’s roughly 17 percent of the world’s worth, according to the study.
“There is no scenario in which the risk to financial assets are unaffected by climate change,” said Professor Simon Dietz, an economics-focused climatologist at the London School of Economics and the lead author of the study, to the Guardian. “That is just a fiction.”
A previous study has already highlighted the fact that climate change will hit people’s wallets, and for many, that’s a far more tangible threat than the global temperature records we seem to keep breaking. Tracking gross domestic product (GDP) values – a measure of a nation’s wealth – with average annual temperatures over time, this team of economists discovered that economic productivity will fall by 23 percent by 2100 if current warming trends continue.
Importantly, this study revealed that the world’s wealthiest nations, including China and the U.S., will also suffer as a result of climate change (not just the poorest nations). This new study follows a similar methodology to the earlier one, using a variety of warming scenarios to check their effects on the global economy. They looked at how increasingly common extreme weather events, rising sea levels, and increasing temperatures will destroy financial assets and reduce economic productivity.
Increasingly common wildfires will directly wipe valuable assets off the face of the Earth. Jackal Yu/Shutterstock
Everything is affected by climate change. The warmer the world gets, the less productive its workers will be. Agriculture will suffer in many regions of the world that are set to become drier. Species extinction will start to break the food chain that we rely on for consumption. All in all, if warming continues unabated, 1.8 percent of the world’s worth will be gone by the end of the century. That may not sound like much, but that amounts to the entire GDP of Italy, India, Canada, or Australia.
The study also estimates that there’s a one-in-a-hundred chance that unadulterated warming will lead to a global financial asset loss of 17 percent. That’s the entire European Union’s worth, and roughly that of the U.S. and China’s combined. No matter which way you look at it, that’s a lot of cash going up in smoke.
Climate change is the problem that will make everything that’s bad, worse. Marine and terrestrial ecosystems are already feeling the strain, and it won’t be long before humanity’s civilizations begin to sink under the waves, from the Maldives to New York City. As the Paris agreement last December and numerous public opinion polls show, there is a global consensus to stop the tides rising any further – but it’s frankly ludicrous that so little progress has been made to date considering all that’s at stake.
If warming is kept to 2°C (3.6°F), as agreed in Paris, we’ll claw back $315 billion, although we’d still be hemorrhaging money. Despairingly, though, the only way that the Paris target will be achieved is to refrain from building any more fossil fuel power plants anywhere in the world – and this, at present, is looking like nothing short of impossible.