New study warns of massive global economic cost from climate change

A new study warns that catastrophic effects of global warming could cause the worldwide economy to shrink by about 20% by the middle of the century, even if future emissions of greenhouse gases are drastically reduced.

If emissions aren't reduced, even greater economic damage can be expected, according to researchers at the Potsdam Institute for Climate Impact Research (PIK) in Germany.

The study, published on Wednesday in the journal Nature, calculated annual economic damage from climate change at more than $38 trillion per year if climate-damaging emissions aren't significantly reduced.

That figure is six times higher than the estimated costs of the measures needed to limit global warming to a maximum of two degrees Celsius above the pre-industrial average, according to the study.

The expected damage varies greatly from region to region. The poorest countries and those least responsible for climate change will be hit the hardest, according to the study.

For the United States and Germany, for instance, the researchers predict that the economy will shrink by 11% by the middle of the century even in a scenario where climate change is limited to two degrees or less, compared to a scenario without climate impacts.

For the calculation, the researchers analysed data from the past 40 years from more than 1,600 regions on how weather extremes have influenced economic growth.

Based on climate models, they calculated how these are likely to affect the economy over the next 26 years.

Damage caused by natural disasters like storms or forest fires, which many researchers believe will be worsened by climate change, are not included in the calculations but could further increase the economic damage.

According to the United Nations, efforts so far have fallen well short of what's needed to limit climate change to two degrees or less.