Climate Change Could Cost the World $178 Trillion
Climate change isn’t just destructive -- it’s expensive. A new report from consulting firm Deloitte finds that climate inaction will cost the global economy $178 trillion over the next 50 years. Findings also revealed that if the world warms by 3 degrees Celsius compared with pre-industrial times, economic growth will stagnate as countries would be spending more resources on repairing climate-related damages rather than creating new economic opportunities. Worse, climate change will cause a loss of productivity and employment, food and water scarcity, worsening health and well-being, and a lower quality of life globally.
While the report is dire, the upside is that stopping climate change has economic benefits. The Deloitte report also says that getting the world to net zero by 2050 could add $43 trillion to the global economy, creating what they call a "green industrial revolution.”
The Economist: See what three degrees of global warming looks like, October 7, 2021.
MSNBC: We Must Pay Attention To ‘Urgent Crisis’ Of Extreme Heat Events, May 23, 2022.
Why This Matters
The most common excuse for climate inaction is that reducing emissions would be too expensive. Some evidence does support this -- the Deloitte report suggests that in the short term, it will be more expensive to phase out fossil fuels, but there would be a "turning point” around 2041 when the costs of the energy transition would break even. Moreover, climate change is already putting financial pressure on the global economy. Extreme weather has cost the US $750 billion dollars in the past five years alone. To avoid the worst, climate action needs to happen now: Data released from the World Meteorological Organization (WMO) shows that in the next five years there is a 50-50 chance of the earth breaking the 1.5-degree Celsius limit established during the Paris Agreement.
MSNBC: Climate Change Is Our Greatest Existential Threat, January 3, 2022.
Reuters: World could see 1.5C of warming in next five years, May 10, 2022.
The report lays out four stages that would lead the world to net zero:
- Bold climate plays: Coordination and collaboration between the public and private sectors to set the stage for decarbonization by formulating policies and frameworks for a low-carbon future.
- Accelerating to net zero: New investments to allow for economic restructuring around more sustainable industries. This would be the most costly stage, as "the decline of emissions-intensive industries would create growing pains for some economies.”
- Turning point: When the economies adjust (or are nearly adjusted) to the new investments and structure, they will "realize the dividend of the transformation and experience net positive growth.”
- Low-emission future: "Interconnected, low-carbon systems underpin a clean economy that would grow at an increasingly faster rate than its carbon-intensive alternative.”
"The time for debate is over. We need swift, bold, and widespread action now -- across all sectors," stated Renjen. "Will this require a significant investment from the global business community, from governments, from the non-profit sector? Yes. But inaction is a far costlier choice. … In my mind the question is not why we should make this investment, it's how can we not?"
IPCC: Video message by UN Secretary General at the WGIII AR6 press conference, April 4, 2022.
BBC: UN scientists say it's 'now or never' to limit global warming, April 4, 2022.
WSJ: The Cost to Reduce Global Warming? $131 Trillion Is One Answer, October 29, 2021.