Climate change could cause the global economy to lose $23T

According to a study released by a global reinsurance company, climate change’s toll on agriculture, disease, and physical infrastructure, in addition to redirected government spending, among other issues, could cause the global economy to lose $23 trillion, 10% of its value, by 2050.

The Swiss Re Institute’s report shows that output could be 18% lower than in a world without climate change if no mitigating actions are taken and temperatures grow by 3.2 degrees Centigrade.

The report’s stark projections show that the poorest countries would be the hardest hit.

Remarkably, countries in the Organization for Economic Cooperation and Development, a group of the world’s richest countries, would see a 5% reduction in the size of their economies, compared to 9% in South America and approximately 17% in the Middle East and Africa, and 25% in Association of Southeast Asian Nations countries.

If temperatures increase 3.2 degrees, it will lead to an 18.1% loss in economic output

The main forms of economic injury would come through physical risks, including property damage and trade disruptions from boosted levels of severe weather events, lost productivity, and transition risks.

The bleak report considers that some level of climate change is already here to stay and will cause economic harm down the line.

Its baseline estimates that the world sticks to Paris Agreement targets of keeping temperatures from growing 2 degrees Celsius. It would imply a 4.2% reduction in the projected global economy relative to no further temperature increases.

Still, more likely is a 2 to 2.6-degree increase, which would result in an 11 to 13.9% level of economic loss, nearly 10% higher than the baseline.

A worst-case scenario, in which temperatures increase 3.2 degrees, would lead to an 18.1% loss in economic output by mid-century.

At Thursday’s summit, U.S. President Joe Biden is anticipated to set a new goal for the U.S. to cut carbon emissions by half by 2030. However, global cooperation will be necessary to keep temperatures from increasing above 2 degrees Celsius.