Climate change affects global GDP, hits developing nations hard

A recent report released by the University of Delaware has revealed the significant economic toll inflicted by climate change on the global economy, especially impacting developing nations.

The analysis, preceding the COP28 climate talks, highlighted that human-induced climate shifts had slashed 6.3% off the world's economic output last year when measured across populations.

The study's findings encompass a broad spectrum of consequences triggered by climate change, including direct impacts on sectors like agriculture and manufacturing, reduced productivity due to extreme heat, and spillover effects influencing global trade and investments, reported AFP.

Lead author James Rising from the University of Delaware emphasised that the world has incurred substantial economic losses due to climate change, with the most severe burden borne by economically disadvantaged nations. Rising underscored the urgent need for support to address the challenges faced by these nations.

When evaluating global GDP loss without population-based metrics, the report highlighted a 1.8% reduction in GDP, equivalent to approximately $1.5 trillion in 2022. This disparity between the two figures reflects the uneven distribution of impacts, predominantly concentrated in low-income countries and tropical regions with higher populations but lower GDP.

The report disclosed that least-developed countries faced a notably higher population-weighted GDP loss of 8.3%. Regions like Southeast Asia and Southern Africa experienced substantial economic declines, with GDP losses of 14.1% and 11.2%, respectively.

While certain developed countries reaped benefits, such as Europe's nearly 5% net gain in GDP owing to warmer winters, the report cautioned that these gains might diminish. Forecasts indicated that hotter summers could offset the advantages derived from milder winters.

At the previous COP27 discussions, countries agreed to establish a dedicated fund to assist vulnerable nations in dealing with "loss and damage" stemming from climate disasters. The forthcoming COP28 talks in Dubai will centre on negotiating the fund's specifics, including contributions and distribution, which remains a critical point of contention.

The report highlighted that low- and middle-income countries collectively suffered a capital and GDP loss totaling $21 trillion over the last three decades, equating to about half of the total GDP of developing nations in 2023. However, the authors cautioned that these figures represented conservative estimates, excluding non-market losses and other impacts from the analysis.