Each one degree rise in global temperatures reduces world GDP by 12%, according to a new study by economists Adrien Bilal and Diego Känzi, published in May, which could reduce global GDP by half by the end of the century.

“These [large declines] are comparable to the economic damage caused by fighting a war domestically and permanently,” the authors say.

Paper also concludes that global GDP per capita would have been 37% higher today had no warming occurred between 1960 and 2019 instead of the 0.75°C observed increase in global mean temperature that has already happened.

This year’s disaster season is well underway and Hurricane Beryl caused hundreds of millions of dollars of damage as it ripped through the Caribbean earlier this month. Meteorologists say this year will see a “hyperactive hurricane season” and predict as many 25 more hurricanes could cross the Atlantic.

And that is just hurricanes. Torrential rainfall has already caused flash floods and destructive landslides around the world, while thousands of people have already died from all-time record-high heatwaves stretching from the US to India. All the Climate Crisis warning lights were already flashing red at the COP28 summit last year and this year it is becoming increasingly clear that the climate models are wrong and global warming is accelerating far faster than scientists have been predicting.

The economic impact of all these events has not been measured, but according to the new academics’ study from the National Bureau of Economic Research, society loses more than $1,000 for every tonne of CO2 emitted.

“This paper estimates that the macroeconomic damages from climate change are six times larger than previously thought … A 1°C increase in global temperature leads to a 12% decline in world GDP,” the authors say. “Our results imply a Social Cost of Carbon of $1,056 per tonne of carbon dioxide. A business-as-usual warming scenario leads to a present value welfare loss of 31%. Both are multiple orders of magnitude above previous estimates and imply that [a] unilateral decarbonisation policy is cost-effective for large countries such as the United States.”

Previous studies that have been based on country-level temperature changes, not global, as in this study, have put the economic impact of the climate change far lower, reducing GDPs by 1-3%. “Under any conventional discounting, such effects seem hardly catastrophic,” say the authors, who based their investigation on three time frames: 1900-2019, the main sample of 1960-2019, and 1985-2019.

“Global temperature shocks predict a large and persistent rise in extreme climatic events that cause economic damage: extreme temperature, extreme wind and extreme precipitation,” the authors say. “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 research suggests that with a global mean temperatures rising from 2024 and reaching 3°C above pre-industrial levels by 2100 (so 2°C above 2024 temperatures) will lead to “precipitous declines in output, capital and consumption that exceed 50% by 2100,” the authors warn.

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