Global GDP could fall by 40% if the planet warms by four degrees

A global warming of four degrees from pre-industrial levels could reduce global GDP by about 40% by 2100, compared to 11% in previous estimates.

That is the conclusion of a study led by the Institute for Climate Risk and Response (ICRR) at the University of New South Wales (Australia) and published in the journal ‘Environmental Research Letters’. This analysis corrects an error in the economic model that underpins the current global climate policy, by exceeding previous carbon parameters. The results support limiting global warming to 1.7 degrees, in line with significantly faster decarbonization targets endorsed by the Paris Agreement, and is much lower than the 2.7 degrees supported by previous models. Timothy Neal, from the ICRR and the School of Economics at the University of New South Wales, says this analysis uses traditional economic frameworks that weigh immediate transition costs against long-term climate damages, but refine a key piece of data. “Traditionally, economists have analyzed historical data that compares weather events with economic growth to calculate the cost of climate damage,” he says. What they don’t take into account, according to Neal, are the disruptions in global supply chains that are currently cushioning economic shocks.

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