The global warming threat to the global economy

Photo: Arun Sankar Agence France-Presse
The economic impact of global warming will be catastrophic in countries such as India or those in Africa, according to Oxford Economics.

According to a model presented by Oxford Economics, a global warming of 3 °C by 2100 would have the potential to lower the level of global GDP to 21 %.

“The aggregate effect of global warming will be well-known, and provide the potential to create severe damage to populations in a high number of country,” said Oxford. The research firm has taken over the data for 205 countries from 1961 to 2019. In his modeling with GDP for pivot, she takes care to specify from the outset that the reading is related to the ability, limited, of GDP to capture the issues and constraints associated with climate change. In addition, the exercise does not include the impact of events that are not yet experienced, such as massive flooding of coastal areas under the impact of a rising ocean. It also cannot set a value to the increased mortality, or the loss of “natural capital” that would result in the decline of biodiversity. It is also not the collateral damage arising from the consequences of global warming on populations.

According to the historical data, the country living below the 15 °C average, as in Europe, central Asia and North America, will benefit from global warming. Taking the example of Germany, the increase of 1.4 °C of the temperature observed in this country since the 1960s has added approximately 0.85 of a percentage point per year to growth. The effect occurs mainly in the form of increased agricultural productivity and outdoor activities, and increased construction activity. “But this is true from the modest global warming observed over the last fifty years. And this would be of short duration. “

Worse than the COVID-19

The opposite occurs for countries in warmer regions, such as Africa, South-East Asia and Latin America. Taking the example of India, the GDP would have been 20% higher in 2019 and growth of 0.75 percentage point higher in the absence of warming.

“Most of the major economies (United States, China, Japan) are located under a mean annual temperature near 15 °C (weighted by population). These countries have therefore not yet been really affected by global warming to this day. Since they are at the border, the effect on their economic activity will initially be modest, which may explain the lack of a sense of urgency in these countries. This adds to the difficulties of adopting a joint international action when incentives are not aligned, ” writes Oxford.

90%

It is the decline of india’s GDP as the Oxford team anticipates in the year 2100, the global warming expected absorbing the future growth of per capita income.

According to the research firm, the effects should start to become apparent in these countries from 2030. In the United States, the level of GDP will be 2.3 per cent lower than it would have been without global warming) by 2050, but 28 % lower in 2100. “On the other hand, the effect will be catastrophic in countries such as India or most african States. “Without mitigation of the effects of climate change, these countries would be, on a per capita basis, 75 % poorer than if there was no warming. Oxford predicts that in India, the GDP would be lower by 90 % by 2100, warming is expected absorbing the future growth of per capita income.

All in all, according to a base scenario providing for an increase of 2 °C in 2050 and 3 °C by 2100 in the absence of mitigation measures, and containing the projections of the UN population exceeding 10 billion, the growth rate of the intensity of fossil fuels would ensure that the negative effects dominate, reducing the global GDP by 21% in 2100.

As a reference, the international monetary Fund estimates that the COVID-19 is going to remove 4.9% in global GDP this year, more than 8 % if we take into account a projected growth of 3.3% in 2020 in advance of the pandemic. The loss has been about 10 % during the Great Depression.

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