Global GDP loss from climate change will increase exponentially the hotter the planet gets when its cascading impact on global supply chains is factored in, finds a brand new study led by UCL researchers.
The study, published in Nature, is the primary to chart “indirect economic losses” from climate change on global supply chains that can affect regions that might have been less affected by projected warming temperatures.
These previously unquantified disruptions in supply chains will further exacerbate projected economic losses because of climate change, bringing a projected net economic lack of between $3.75 trillion and $24.7 trillion in adjusted 2020 dollars by 2060, depending on how much carbon dioxide gets emitted.
Senior writer Professor Dabo Guan (UCL Bartlett School of Sustainable Construction) said: “These projected economic impacts are staggering. These losses worsen the more the planet warms, and whenever you consider the consequences on global supply chains it shows how in all places is at economic risk.”
As the worldwide economy has grown more interconnected, disruptions in a single a part of the world have knock-on effects elsewhere on the planet, sometimes in unexpected ways. Crop failures, labour slowdowns and other economic disruptions in a single region can affect the supplies of raw materials flowing to other parts of the world that rely upon them, disrupting manufacturing and trade in faraway regions. That is the primary study to analyse and quantify the propagation of those disruptions from climate change, in addition to their economic impacts.
Because the Earth warms, the more severe off economically it becomes, with compounding damage and economic losses climbing exponentially as time goes on and the warmer it gets. Climate change disrupts the worldwide economy primarily by health costs from people affected by heat exposure, work stoppages when it’s too hot to work, and economic disruptions cascading through supply chains.
The researchers compared expected economic losses across three projected global warming scenarios, called “Shared Socioeconomic Pathways,” based on low, medium and high projected global emissions levels. The most effective-case scenario would see global temperatures rise by only one.5 degrees C over preindustrial levels by 2060, the center track, which most experts consider Earth is on now, would see global temperatures rise by around 3 degrees C, and the worst-case scenario would see global temperatures rise by 7 degrees C.
By 2060, projected economic losses will probably be nearly five times as much under the best emissions path than the bottom, with economic losses getting progressively worse the hotter it gets. By 2060, total GDP losses will amount to 0.8% under 1.5 degrees of warming, 2.0% under 3 degrees of warming and three.9% under 7 degrees of warming.
The team calculated that offer chain disruptions also get progressively worse the hotter the climate gets, accounting for a greater and greater proportion of economic losses. By 2060, supply chain losses will amount to 0.1% of total global GDP (13% of the entire GDP lost) under 1.5 degrees of warming, 0.5% of total GDP (25% of the entire GDP lost) under 3 degrees, and 1.5% of total GDP (38% of the entire GDP lost) under 7 degrees.
Co-lead writer, Dr Daoping Wang of King’s College London, said: “The negative impacts of maximum heat sometimes occur quietly on global supply chains, even escaping our notice altogether. Our developed Disaster Footprint model tracks and visually represents these impacts, underlining the imperative for global collaborative efforts in adapting to extreme heat.”
For instance, although extreme heat events occur more often in low-latitude countries, high-latitude regions, comparable to Europe or the USA, are also at significant risk. Future extreme heat is more likely to cost Europe and the US about 2.2% and about 3.5% of their GDP respectively under the high emission scenario. The UK would lose about 1.5% of its GDP, with chemical products, tourism and electrical equipment industries suffering the best losses. A few of these losses originate from supply chain fluctuations attributable to extreme heat in countries near the equator.
The direct human cost is likewise significant. Even under the bottom path, 2060 will see 24% more days of maximum heatwaves and an extra 590,000 heatwave deaths annually, while under the best path there could be greater than twice as many heatwaves and an expected 1.12 million additional annual heatwave deaths. These impacts won’t be evenly distributed around the globe, but countries situated near to the equator will bear the brunt of climate change, particularly developing countries.
Co-lead writer, Yida Sun from Tsinghua University said: “Developing countries suffer disproportionate economic losses in comparison with their carbon emissions. As multiple nodes in developing countries are hit concurrently, economic damage can spread rapidly through the worldwide value chain.”
The researchers highlighted two illustrative examples of industries which are a part of supply chains in danger from climate change: Indian food production and tourism within the Dominican Republic.
The Indian food industry is heavily reliant on imports of fats and oils from Indonesia and Malaysia, Brazilian sugar, in addition to vegetables, fruits and nuts from Southeast Asia and Africa. These supplier countries are amongst those most affected by climate change, diminishing India’s access to raw materials, which is able to diminish its food exports. Because of this, the economies of nations reliant on these foods will feel the pinch of diminished supply and better prices.
The Dominican Republic is anticipated to see a decline in its tourism as its climate grows too warm to draw vacationers. A nation whose economy is heavily reliant on tourism, this slowdown will hurt tourism-reliant industries including manufacturing, construction, insurance, financial services, and electronic equipment.
Professor Guan said: “This research is a vital reminder that stopping every additional degree of climate change is critical. Understanding what nations and industries are most vulnerable is crucial for devising effective and targeted adaption strategies.”
