Global Per Capita Income Could Drop 20-24% by 2100 as Climate Change Intensifies

A quarter of world’s per capita gross domestic product could disappear by the end of the century if climate change continues to progress unabated, according to a study published in the journal PLOS Climate by teams from the University of Cambridge’s climaTRACES Lab and the International Monetary Fund on September 23, reported HT.

The research stated that adhering to Paris Agreement goals could generate 0.25% global benefit compared to scenarios where temperatures continue rising at historical rates.

Considering that the planet has already warmed by 1.2 degrees Celsius , it has inflicted a global income loss of 2% loss—equivalent to $1.6 trillion—between 1960 and 2014. Another 2023 report by University of Delaware also stated that the global GDP losses from warming stood at 1.8%, about $1.5 trillion. “That is, the world is estimated to be $1.5 trillion poorer than it would have been without climate change,” it stated.

Co-authors Mohaddes and Raissi used data from the International Panel on Climate Change, which takes into consideration different rates of temperature increase, climate variability, and adaptation efforts, to analyse temperature impact projections for 174 countries between 2015 and 2100. Future projections were compared to two baselines by the researchers: a hypothetical "no further warming" scenario and a scenario that mirrored temperature trends from 1960 to 2014.

In the worst-case scenario, where greenhouse gas emissions are high and adaptation efforts to tackle climate change are limited, global income per person could drop by 20-24% globally by 2100, compared to a “no further warming” baseline.

Economic Risks of Climate Change

Climate change is taking an economic toll on countries globally, with major global institutions warning of long-term losses. As per United Nations estimates, on one hand, emerging markets and developing countries, excluding China will need between $2.3 trillion and $2.5 trillion a year by 2030 to meet climate goals. That amounts to four times what is currently invested.

However, a report by the International Monetary Fund confirmed that climate change presents a major threat to long-term growth and prosperity and has a direct impact on the economic wellbeing of all countries. A 2018 report by the World Bank also revealed that the rising temperatures and changing monsoon rainfall patterns from climate change could cost India 2.8% of GDP and depress the living standards of the nearly half the country’s population by 2050.

Citing “South Asia’s Hotspots: The Impact of Temperature and Precipitation Changes on Living Standards”, the above World Bank report claimed that almost half of South Asia’s population including India lives in the vulnerable areas and will suffer from declining living standards due to falling agricultural yields, lower labour productivity or related health impacts.

It also underscored that India’s average annual temperatures are expected to increase by 1 degree Celsius to 2 degrees Celsius by 2050 even if preventive measures are taken along the lines of those recommended by the Paris Agreement of 2015. In the absence of preventive measures, the average temperatures in India could rise by 1.5 degrees Celsius to 3 degrees Celsius, added the World Bank report.