A new study suggests that the economic impacts of climate shifts may be much worse than previously estimated. One of the co-authors summarized these findings at The Conversation, noting that close to half the world's economy could be knocked out.
What's happening?
This research from the University of New South Wales was published in March in the journal Environmental Research Letters. It sought to build an economic model to predict declining productivity tied to climate shifts.
Previous models hadn't taken into account the effects of extreme weather patterns in one country on the economy of another. By factoring in the interdependence of global trade systems, this model could be more accurate.
"We found if the Earth warms by more than 3°C by the end of the century, the estimated harm to the global economy jumped from an average of 11% (under previous modelling assumptions) to 40% (under our modelling assumptions)," wrote study co-author Timothy Neal. "This level of damage could devastate livelihoods in large parts of the world."
Other studies seem to back up this projection. One has suggested that productivity could drop by up to 34%.
Why is this important?
Rising sea levels alone are likely to cause trillions of dollars of damage, never mind the toll of drought-decimated crops, vector-borne disease, and forced displacements. The price tag on mitigating emissions to slow such climate shifts now would be much smaller than the cost of adapting once they've arrived.
Some studies peg the ratio at $1 of mitigation investment leading to $13 of adaptation costs avoided. Even from a purely economic standpoint, it's vital that strategic investments are made now to help lessen and prepare for future disasters.
What can be done?
With standards relaxing at bodies like the Net-Zero Banking Alliance, financial institutions are going to have more leeway to fund polluting industries, particularly those in oil and gas. Public funding has a role to play as well, though it's just as likely to prop up pollution if there's a financial incentive.
This hasn't stopped other groups from pushing in the other direction, however. Aligned Climate Capital is just one of many funds focusing on tackling the issue while also providing returns to investors. Some investors even see changing political winds in the United States as an opportunity to support promising assets.
While modeling like that from the University of New South Wales indicates the need for investments on a mass scale, individuals can also make a difference by supporting pro-environment efforts in their own communities. And consumers choosing to essentially vote with their wallets for brands committed to meaningful change — rather than greenwashing — can end up having large-scale effects after all.
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