In 2022, Bangladesh experienced a 9.4 per cent decrease in its total GDP, with potential fluctuations within a range of 7 per cent to 12 per cent, highlighting the significant economic impact of climate change faced by the country.
This loss equally affected capital, primarily due to human-produced capital setbacks, while renewable (natural) capital remained relatively stable. The negative effects of climate warming impacted GDP growth, resulting in reduced pressure on natural resources, read a press release.
Climate change is already affecting GDP and capital globally, with poor countries bearing the brunt, according to a new report published Wednesday by the University of Delaware’s Gerard J Mangone Climate Change Science and Policy Hub. The report, “Loss and Damage Today: How climate change is impacting output and capital”, coincides with the start of COP28, where countries are expected to adopt a framework for the new UN fund to help nations recover from the “loss and damage” caused by climate change as decided at COP27.
Globally, climate change has led to a population-weighted GDP loss of 6.3 per cent in 2022. The unweighted percentage of global GDP lost is estimated at 1.8 per cent, or about $1.5 trillion, and the difference between those two numbers reflects the uneven distribution of impacts, which concentrate in low-income countries and tropical regions that typically have more population and less GDP.
Indeed, least developed countries are exposed to an average population-weighted GDP loss of 8.3 per cent, and Southeast Asia and Southern Africa are particularly affected, with countries losing an average of 14.1 per cent and 11.2 per cent of their GDP, respectively.
“The world is trillions of dollars poorer because of climate change, and most of that burden has fallen on poor countries. I hope that this information can clarify the challenges that many countries already face today and the support they urgently need to address them”, says James Rising, author of the study and Assistant Professor at the University of Delaware.
Climate change is also exacerbating existing global inequalities, with many high-income countries currently experiencing net GDP gains. These benefits mostly arise from reduced winter chill, which lowers energy consumption and mortality rates. Yet as the planet continues to warm, these benefits are poised to erode and eventually turn negative, with the energy and health effects of hotter summers gradually offsetting benefits from mild winters.
“Our analysis draws on 58 economic models and employs machine learning to produce a "best-estimate" of the current GDP and capital wealth losses from climate change”, says the author. “The last ten years have seen a revolution in how we understand macroeconomic risks, and this report builds a synthesis of all of their insights.”
The report provides impact estimates for key UNFCCC negotiating groups and relevant stakeholders, such as the Climate Vulnerable Forum.
The analysis also reveals the complex dynamics between climate change, economic outcomes, and capital investments. Low and middle-income countries face significant capital losses, posing challenges to their long-term economic resilience and growth. Low and middle-income countries have experienced $2.1 trillion in produced capital losses due to climate change.
When GDP and capital losses are combined, the analysis finds that low and middle-income countries have experienced a total loss of $21 trillion since the Rio Convention was adopted in 1992. All UNFCCC party groupings except for the EU have experienced total losses, with the greatest losses on the G-77 at $29 trillion. These losses are expected to be conservative estimates since important impact channels and non-market losses are not included in the analysis.
The report suggested that the stark impact of climate change on global GDP and capital is undeniable, particularly in vulnerable nations bearing the heaviest burdens. Urgent collaborative efforts, focusing on equitable solutions and robust climate resilience measures, are imperative to mitigate these adverse effects and secure a sustainable future for all nations."
