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The devastating effects of climate change will be critical for the economy of the near future. The world is already "committed" to a 19% drop in average income by 2050 due to the effects of global warming and Spain is already certain to lose 18% of its average income by mid-century, in comparison to a situation without climate impacts, according to research by Maximilian Kotz, Anders Levermann and Leonie Wenz, from the Potsdam Institute for Climate Impact Research, published in the journal Nature this Wednesday. 

The study, entitled "The economic commitment of climate change", finds that the damage leading to these income falls is already baked-in and will affect the entire world economy, even if a drastic reduction in CO₂ emissions were to begin today. Moreover, the damage is six times greater than what it would cost to limit warming to two degrees Celsius, explains the study. But taking action now to limit warming to two degrees C will pay huge dividends after 2050 - both climatically and economically - the study suggests.   

“Strong income reductions are projected for most regions, including North America and Europe, with South Asia and Africa the most strongly affected. These are caused by the impact of climate change on various aspects that are relevant for economic growth, such as agricultural yields, labour productivity or infrastructure,” explained Maximilian Kotz in a press release from the Institute.

The estimated annual impact on the global economy amounts to 38 trillion dollars in its median estimate - although to a range between 19 trillion and 59 trillion dollars in 2050 depending on how humanity reacts to the climate challenge and if it achieves a considerable reduction in emissions. These are damages resulting mainly from rising temperatures, but also from changes in rainfall and temperature variability. "Accounting for other weather extremes, like storms or wildfires, could further raise them", said Kotz.

"These near-term damages are the result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. And we have to reduce our emissions drastically and immediately. If not, the economic losses will be even greater in the second half of the century, reaching up to 60% on a global average by 2100. This clearly shows that protecting our climate is much cheaper than not doing so, and that without even considering non-economic impacts such as loss of life or biodiversity," reflected scientist Leonie Wenz who led the study.

Countries in the tropics will suffer most

In addition to the national economic impacts, the study incorporates those that affect different subregions thanks to a methodological approach that allows greater detail. This is achieved by combining empirical data on the the economic effects of climate impacts over recent decades with state-of-the-art climate simulations to predict their future impact on the economy.

“Our study highlights the considerable inequity of climate impacts: we found damage almost everywhere, but countries in the tropics will suffer the most because they are already warmer. Therefore, further increases in temperature will be most harmful there. The countries least responsible for climate change are predicted to suffer 60% greater income losses than the countries with the highest incomes and 40% more than countries with the highest emissions. These are also the ones who will have the fewest resources to adapt to the impacts. It is on us to decide: structural change towards a renewable energy system is needed for our security and will save us money. If we maintain the path we are currently on, the consequences will be catastrophic. The temperature of the planet can only be stabilized if we stop burning oil, gas and coal,” says Anders Levermann, researcher at the Potsdam Institute and co-author of the study.