Climate Change Could Cost $38 Trn a Year Globally by 2050: What It Means for India

The economic cost of climate change is rapidly growing with global damages projected to reach $38trn annually by 2050 under current conditions. Storms, floods and heatwaves already cost about $16mn every hour. Repeated extreme events have damaged infrastructure and agriculture, pushing cumulative losses since 2000 into the trillions, according to the FICCI-EY Risk Survey 2026.

The report underscored that climate change is not a distant environmental threat but an immediate financial shock disrupting economies, supply chains and livelihoods.

From India’s perspective, water scarcity is a growing business risk, with per capita availability estimated at 1,341 cubic meters, below the stress threshold, stated the report.

Severe groundwater extraction in Punjab, Haryana, Rajasthan and Karnataka threatens water-intensive sectors such as agriculture, food processing, textiles, chemicals, power and electronics.

Escalating temperatures and rising extreme events would result in productivity losses of 20% to 30% in construction, logistics and mining, while higher cooling demand has lifted power costs by about 15%. For companies, this raises risks of production disruptions, higher compliance costs, location constraints and supply chain instability. The report further mentioned that this increases credit risk in agriculture, MSMEs and climate-exposed regions, while insurers face rising crop, health and property claims.

Repeated extreme events have damaged infrastructure and agriculture, pushing cumulative losses since 2000 into the trillions. Water mismanagement alone could cut average GDP by 8% and up to 15% in low-income countries, threatening over 50% of global food production, the report added.

Yield volatility has pushed food prices up by 4% to 6%, disrupted rural demand and raised the risk of a 16% output decline by 2030. Heat stress is increasingly shaping financial and operational risk.

Global Economic Risks

Echoing similar concerns, the 2024 report published in the journal Nature by Potsdam Institute for Climate Impact Research stated that climate change, leading to damaged farming, infrastructure, productivity and health, will cost an estimated $38trn per year by 2050. It also mentioned that climate change will shave 17% off the global economy’s GDP by the middle of the century.

“The world population is poorer than it would be without climate change,” Potsdam climate data researcher Leonie Wenz, co-author on the study told Reuters. “It costs us much less to protect the climate than not to,” she added.

Cost of Climate Change to India

According to ‘Climate Risk Index 2026’  report published by Germanwatch, extreme weather events in India between 1995 and 2024 cost the country nearly $170bn in economic losses—placing India at the ninth spot among the ten countries most affected by extreme weather events over the past three decades.

India's ranking on the list highlights how, despite making the least contribution to global emissions, the Global South suffers the most from the effects of climate change.