Climate change will cost global economy $38 trillion every year by 2050, finds study

The predicted loss is massive and already about six times more than what it would cost to reduce carbon emissions enough to keep the average temperature rise below 2 degrees Celsius, the researchers said.

These economic damages are mostly due to rising average temperatures. However, when the researchers also considered other factors like rains and storms, the predicted economic damages increased by about 50 per cent and varied more from one region to another.

The researchers looked at detailed weather and economic data from over 1,600 regions globally, covering the last 40 years.

While most regions in the world are expected to suffer economically due to climate change, they said regions near the poles might see some benefits due to less temperature variability.

On the other hand, the hardest-hit regions will likely be those closer to the equator, which have historically contributed less to global emissions and currently have lower incomes.

"Our study highlights the considerable inequity of climate impacts. We find damages almost everywhere, but countries in the tropics will suffer the most because they are already warmer. Further temperature increases will therefore be most harmful there," said Anders Levermann, head of Research Department Complexity Science at the Potsdam Institute and co-author of the study.

The countries least responsible for climate change are predicted to suffer income loss that is 60 per cent greater than the higher income countries and 40 per cent greater than higher emission countries. They are also the ones with the least resources to adapt to its impacts, he said.

"These near-term damages are a result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. We have to cut down our emissions drastically and immediately; if not, economic losses will become even bigger in the second half of the century, amounting to up to 60 per cent of the global average by 2100," Wenz said.

"It is on us to decide: structural change towards a renewable energy system is needed for our security and will save us money. Staying on the path we are currently on will lead to catastrophic consequences. The temperature of the planet can only be stabilised if we stop burning oil, gas and coal, Levermann said.

Global average temperatures have risen by more than 1.1 degrees Celsius since 1850, exacerbating climate impacts, with 2023 being the hottest on record.

The greenhouse gases spewed into the atmosphere, largely due to the burning of fossil fuels since the start of the Industrial Revolution, are closely tied to it.

According to the World Meteorological Organisation's "State of the Global Climate 2023" report, greenhouse gas levels, surface temperatures, ocean heat and acidification, and sea level rise reached record highs in 2023.

Climate science says the world needs to slash CO2 emissions by 43 per cent by 2030 to limit the average temperature rise to 1.5 degrees Celsius, the guardrail to prevent worsening of climate impacts.

The business-as-usual scenario will take the world to a temperature rise of around 3 degrees Celsius by the end of the century, scientists have warned.