Record-breaking heat waves, severe floods and acute wildfires, exacerbated by climate change, carry a colossal price tag: an approximately 19% reduction in global income over just the next 26 years, a new study found.
That financial gut punch won’t just affect big governments and corporations. According to the United Nations, the world is heading toward a gain of nearly 3 degrees of global warming in the next century, even with current climate policies and goals – and researchers say individuals could bear the economic burden.
The researchers in Wednesday’s study, published in Nature, said financial pain in the short-term is inevitable, even if governments ramp up their efforts to tackle the crisis now.
“These impacts are unavoidable in the sense that they are indistinguishable across different future emission scenarios until 2049,” two of the study’s researchers from the Potsdam Institute of Climate Impact Research, Maximilian Kotz and Leonie Wenz, told CNN via email.
However, they say immediate actions to reduce climate change could stem some losses in the longer term.
Noah Diffenbaugh, a professor and environmental researcher at Stanford University, said the economic damage from climate change will take different shapes. Not only can extreme weather events result in costly repairs to damaged property, but elevated temperatures can also impact agriculture, labor productivity, and even cognitive ability in some cases.
While discourse about the cost of climate change often refers to potentially expensive mitigation efforts like curbing oil and gas use or technology to pull carbon pollution out of the air, investing in greener technology, the study argued that short-term financial damage wrought by climate change already outweighs the cost of trying to solve the crisis.
Researchers estimated it would cost the global economy $6 trillion by 2050 to comply with the Paris Climate Agreement—the international agreement among nearly 200 nations to tackle climate change—compared to the study’s estimated $38 trillion economic damage due to climate change.
“Adaptation could offer ways to reduce these damages,” the researchers Kotz and Wenz said.
Bernardo Bastien, a researcher at the Scripps Institute of Oceanography at the University of California San Diego, said that adaptation strategies, which are approaches designed not to reduce climate change, but to respond by limiting its negative effects, could help save money on a longer time horizon.
Bastien gave an example: utility companies in the state of California that have shut down the electrical grid to prevent wildfires.
“When you turn off electrical grids, you’re turning off industry and you’re turning off a lot of households that use electricity for their well-being,” Bastien said. “It’s very costly but very necessary.”
And while the study concludes some economic damage is guaranteed before 2049, its authors argue that benefits from curbing climate change could emerge a few decades down the line.
“Damage estimates diverge strongly across emission scenarios after 2049, conveying the clear benefits from mitigation from a purely economic point of view,” the study said.
However, the expected financial hit won’t be distributed evenly.
Diffenbaugh, who was not associated with the study, said that while research showing the aggregate impact of climate change is important, “embedded in those aggregate impacts are very stark disparities in who is most impacted by climate change.”
“We have clear evidence that overall, the poor are harmed more,” he said. “That’s what’s likely to happen from the global warming that’s already occurred and what’s likely to happen even for small increments of global warming.”
The Nature study estimated the economic damage of different regions. North America and Europe are expected to see a lower income reduction in the next 26 years at 11%, compared to South Asia and Africa at 22%.
The United States, a historically large polluter, will take a smaller economic hit than some neighboring countries, according to the study. However, it won’t be spared from disruptions caused by a warming planet — especially younger generations of Americans.
A different paper, published Tuesday in Consumer Reports from global consulting firm ICF, estimates that the lifetime personal cost of climate change for a baby born in the US in 2024 could be as high as $500,000.
The ICF paper said price hikes on essential elements of the cost of living in the US will add up due to climate change. Housing costs are projected to increase by $125,000 over the lifetime of a person born in 2024, owing to elevated maintenance and insurance costs due to the risks of flooding and other weather-related damage, the paper said. Food prices are also seen rising by an estimated $33,000 over the lifetime of a 2024 baby, due to disruptions to agriculture and supply chains, the paper said. Other expenses, like energy, transportation and health care, are expected to balloon in the next few decades, as well.
“For many Americans, this financial loss will require difficult decisions about how to pay for food, housing, and other daily expenses, which climate change will increase by approximately 9 percent over their lifetime,” the paper said.