Climate change could quadruple economic losses by 2050

New data suggests that the economic cost of climate change could be far worse than previously estimated, with GDP losses potentially quadrupling by 2050 under some scenarios. The Network for Greening the Financial System (NGFS) warns that without timely action to transition to a sustainable economy, global economic impacts could be severe. While it’s not too late to mitigate these effects, achieving net-zero emissions by 2050 would require significant global investment, as highlighted by the latest reports from both NGFS and the United Nations Environment Programme (UNEP).

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The economic impact of climate change is expected to be far worse than previously anticipated, as new data has prompted revisions to economic models predicting its effects. According to a report by the Network for Greening the Financial System (NGFS), taking into account the latest climate data, including record temperature increases, the projected physical risk impact of climate change on global GDP could quadruple by 2050 in some scenarios.

NGFS, which represents over 140 central banks and financial authorities, emphasized that while the outlook is grim, it is not too late to take action. Timely efforts to transition to a more sustainable economy could help mitigate the severe negative impacts on GDP. The warning follows a stark update by the United Nations Environment Programme (UNEP), which reported last month that the world is on track for a temperature rise of 3.1C above pre-industrial levels if current policies remain unchanged. At this level of warming, NGFS’s updated model predicts GDP losses could reach 30%.

Even if governments manage to implement all the reforms they have pledged, UNEP suggests that the average global temperature could still rise by 2.6C, which is well above the critical 1.5C threshold. To achieve net-zero emissions by 2050, global investment would need to rise between US$ 900 billion and US$ 2.1 trillion annually, or about 1% of the world’s total economic output. This level of investment is essential to avoid the worst impacts of climate change and to work towards a more sustainable and resilient global economy.