Global Economy Could Tumble Due To Climate Change

A recent study has shown that climate change has the potential to be 10 times more damaging to global economy than previously thought.

In addition to the well-established deleterious effects of heat on agriculture, rising temperatures also will hurt the services-oriented economies of rich countries.

But Brazil, India, Indonesia and Nigeria are already much warmer, meaning the impact of climate change on their economic growth will be even greater. "My feeling is that we are only beginning to understand just how much damage a changed climate can wreak".

What they are not doing, Burke said, is making an argument that temperature is necessarily the most important factor driving national economies. Sterner emphasizes that instead of comparing a country's productivity with other countries', the researchers compared each country with itself during times of differing temperature for this study.

An ideal average annual temperature was determined, which ensures optimal levels of productivity. But countries across the world are pledging to control if not cut carbon pollution as global leaders prepare for a summit on climate change in Paris later this year.

As a country's average temperature gets hotter and extends further past the 55-degree Fahrenheit threshold in Burke's model, economic productivity fares worse.

The economists said in the study that Canada, Russia, and countries in northern and central Europe could see an increase in productivity with warming temperatures, but countries in the tropics and subtropics would feel the worst effects.

The researchers tracked the relationship between temperature change and productivity levels. "Our macro-level results lined up nicely with the micro-level studies", Hsiang said. Burke, Hsiang, & Miguel (Nature 2015) demonstrate the effects of these changes on economies around the world.

"Many other researchers have projected economic impacts under future climate change", Hsiang said.

In a 2010 analysis, Hsiang originally argued that country output should exactly reflect changes in worker productivity, so if workers slowed down at 25 degrees Celsius (77F), national output should too.

"The conclusion [of the new research] that temperature-associated costs will be higher than previously calculated will cause a stir, and should have stark repercussions for policy". In general, 77 percent of countries worldwide will experience per capita income decrease. Other estimates are twice as high. In the same time, average income in Mexico will shrink 73%, while Chinese average income may shrink more than 40%.

"All told, these estimates equate to much larger economic losses than most leading models suggest...", Sterner writes".

Perceiving small and persistent changes in economic growth is extremely hard, and is essentially impossible without reams of data.

"We project these countries could be harmed and often harmed dramatically by future increases in warming", he said.

Previous work done by the three researchers showed that increasing temperatures lead to increased violence, and Hsiang found a relationship between warmer climate and poorer math test scores.

"Historically, people have considered a 20 percent decline in global Gross Domestic Product to be a black swan: a low-probability catastrophe", Hsiang warned.

From November 30 to December 11, France will host the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21/CMP11).

"We don't want to rule out that we could see unprecedented adaptation to hotter temperatures in the future, and we certainly hope we do see it", Burke said. "But we find limited evidence that this is the case". He said that the more dramatic results suggest that more money should be invested into prevention but that he doesn't know "what the right number is". "What that means for policy is that we should be willing to spend a lot more on mitigation than we would otherwise. So in places where increasingly we are relying on people to sit and think to be productive, that could be costly".