One degree temperature rise could slash global GDP by 12%, warns new study

The study said that the new estimates are higher than previous ones due to the use of new datasets that more accurately reflect changes in global mean temperatures

Climate change may pose a significantly greater threat to the global economy than previously believed. A new study suggests that a one-degree Celsius increase in temperature could potentially result in a 12% reduction in global GDP, which is about six times higher than earlier estimates, according to a report by Indian Express (IE).

Conducted by economists Adrien Bilal from Harvard University and Diego Kanzig from Northwestern University, the study warned of “precipitous declines” in outputs, capital, and consumption if temperatures rise unchecked to the predicted three degrees Celsius by the end of the century, the report claimed.

“A 1 degree Celsius increase to global mean temperature (from current levels) leads to a gradual decline in world GDP that peaks at 12 per cent after six years and does not fully mean-revert even 10 years after the shock,” IE reported, citing the authors.

 

In 2022, the global GDP was approximately 100 trillion US dollars. The study emphasised the economic impact of temperature rises from current levels, noting that the global mean temperature has already increased by about one degree Celsius since pre-industrial times (1850-1900 average).

The researchers asserted that their estimates are higher than previous ones due to the use of new datasets that more accurately reflect changes in global mean temperatures. Previous studies primarily focused on country-level temperature changes rather than global increases.

“Global temperature shocks predict a large and persistent rise in extreme climatic events that cause economic damage -- extreme temperature, extreme wind, and extreme precipitation. By contrast, local temperature shocks predict a much weaker rise in extreme temperature, and barely any rise in extreme wind speed and precipitation. This conclusion is consistent with the geoscience literature -- extreme wind and precipitation are outcomes of the global climate that depend on ocean temperatures and atmospheric humidity throughout the globe, rather than outcomes of idiosyncratic local temperature realisations,” the study said.

The study highlighted that global temperature shocks lead to a significant and persistent rise in extreme climatic events such as extreme temperatures, winds, and precipitation, which cause economic damage. In contrast, local temperature shocks have a much weaker effect on these extreme events, IE said.

Furthermore, the study concluded that per capita world GDP would have been 37 per cent higher today if global mean temperatures had not increased by approximately 0.75 degrees Celsius between 1960 and 2019.

In addition to the damages from extreme weather events and the costs of reconstruction, the study accounts for the “social cost of carbon” and the anticipated slowdown in productivity due to rising temperatures and consequent climate change.

Heatwaves in north India

North India is currently witnessing extreme heatwave conditions, with the maximum temperatures soaring over 47 degrees Celsius at some places. The maximum temperature in Delhi soared to 47.4 degrees Celsius, the highest in the country, on May 21. 

Considering the severe heatwave, the India Meteorological Department (IMD) has issued a red alert for states including Punjab, Haryana, Delhi, and Chandigarh, expressing that the heatwave conditions will go on for a couple of days. The weather office additionally forecasted heatwave conditions in states like Gujarat, Himachal Pradesh, Uttar Pradesh, Odisha, Madhya Pradesh, Saurashtra, and Kutch.