It turns out that previous economic models have consistently underestimated the impact of global warming on human well-being. This is the assertion made by a team of researchers from the University of New South Wales in Australia, led by Dr. Timothy Neal. According to their study, a 4 °C increase in Earth’s temperature could make the average person 40 percent poorer. The scientists also predicted that the global GDP per capita would shrink by 16 percent, even if warming is just 2 °C above pre-industrial levels. In contrast, earlier forecasts suggested this reduction would only be 1.4 percent, as reported by The Guardian.
Dr. Neal explained that previous economic models assumed that even significant climate change would have a moderate impact on the global economy. These models typically considered only local weather changes, neglecting how extreme weather events like droughts or floods could disrupt global supply chains. “In a hotter future, we can expect cascading failures in supply chains caused by extreme weather events around the world,” he suggested.
Co-author Professor Andy Pitman emphasized the need to account for extreme situations in various parts of the world, “so that countries can fully assess their economic vulnerability to climate change and then do the obvious—reduce emissions.” Some economists believe that global losses from climate change could be partially offset by warming that benefits certain colder regions of the planet. However, Dr. Neal argues that global warming will impact all countries, as the world’s economies are interconnected through trade.
Mark Lawrence, a professor at the University of Adelaide who studies climate risks, noted that “the results of the new study are credible.” “I believe the economic consequences of climate change could be even worse,” he added. The findings of the study were published in the journal Environmental Research Letters.