The costs of climate change

© Lars-Erik Håkansson

Climate change already causes about 400,000 deaths per year and a 1 per cent loss of global GDP. By 2030 human and monetary losses may double.

What are the human and economic costs of climate change today? And what will they be in twenty years’ time if today’s level of inaction is maintained? An attempt to find a comprehensive answer to this question is given in the 2nd Climate and Vulnerability Monitor by DARA¹ for the Climate Vulnerable Forum. Most of the data and models used were derived after 2007, and are thus more recent than the latest IPCC assessment report.  

DARA estimates that climate change is causing roughly 400,000 annual premature deaths today and that this number will have increased to 700,000 in 2030. Today’s economic costs of climate change are estimated at 0.8 per cent of global GDP and are expected to increase to 2.1 per cent in 2030.

When all the costs (and the few benefits) for continued inaction on climate change are added up, they significantly exceed the costs of mitigation (figure 1). The report concludes that even if developing countries are paying a higher price than the developed world for climate change in terms of human lives and in relation to their economy, all regions will benefit from climate action.

Figure. Action versus inaction over the 21st century. NPV of global climate/carbon costst and mitigation costs relative to GDP (nominal 2010-2100, 3% discount rate). Action equals 450 ppm (RCP 2.9). No action equals mid-point of two non-stabilization scenarios (RCP 8.5 and SRES A1B).

Hunger is the most common climate-related cause of death. Currently, approximately 225,000 people are estimated to die due to climate-induced hunger each year. That is five per cent of all famine deaths. By 2030 this figure is estimated to grow to nine per cent of all famine victims, adding up to a total of 380,000 deaths. About half of these incidents currently occur and will continue to occur in India. Other countries vulnerable to hunger induced by climate change are located in other parts of South East Asia and in sub-Saharan Africa. The most vulnerable groups are found among subsistence small-scale farmers and fishermen.

The second largest cause of climate-related death is diarrheal infections – currently one of the top causes of preventable deaths. About three per cent of total diarrheal deaths are now attributed to climate change, a share that is expected to double in 2030. Bacteria and viruses will benefit from higher temperatures and food will spoil faster. High precipitation will contaminate previously clean water sources, while drought can force people to use contaminated water.

It is hard to work when it is hot outside. When temperatures start to approach 40°C it can even be impossible to get something done without risking one’s health. There is much uncertainty when it comes climate change, but one thing that we know for sure is that temperatures are going to be higher and that the number of extremely hot days is going to increase around the world. This will affect the part of the workforce that work outdoors or in inadequate climate-controlled indoor environments, and will have a huge impact on the economy. This already amounts to 0.5 per cent of GDP or US$ 300 billion, and in twenty years losses due to decreased labour productivity are expected to be more than one per cent of global GDP or US$ 2.5 trillion. There is a big difference in how countries are affected. Low-income countries in tropical and sub-tropical regions will experience much more severe losses. In parts of Africa GDP may be up to six per cent lower because of lost labour productivity in 2030. In some wealthy, northern countries labour productivity might even increase slightly.

Biodiversity loss is the second largest climate-related cost to the global economy. The report estimates the economic value of present biodiversity losses at US$ 80 billion a year. In 2030 this figure is expected to have increased fivefold. No part of the world will remain unaffected, but the impact will be greater in lower income countries were more people are directly dependent on ecosystem services. Climate-related biodiversity loss will put extra pressure on biodiversity that is already suffering from non-climate threats such as deforestation.

Agriculture not surprisingly is the economic sector that will have the biggest economic losses due to climate change. Climate-related losses are already estimated at US$ 50 billion, and in twenty years this figure will have increased sevenfold. Fisheries and forestry also suffer present losses due to climate change and these are expected to increase in the near future. Hydropower is an industry that stands to gain from climate change due to the increase in rainfall, but this is not true everywhere – southeastern Europe and Central America will actually experience losses even in this sector.

The report only assesses what is going to happen by 2030. It does not take into account faster-accelerating and potentially catastrophic climate change that could happen if 1,500 gigatonnes of CO₂ from frozen sediments in the East Siberian Sea were released into the atmosphere or if some of the great ice sheets melt completely. It is hard to predict the exact consequences of this kind of event, but surely they will entail huge costs for all parts of the world.

Earlier economic impact assessments of climate change have sometimes anticipated benefits of carbon fertilization. The authors of the monitor argue that to get a proper analysis, both the pros and cons of all side-effects related to greenhouse gas emissions should be taken into account – not only this specific benefit. Consequently, there is a also a chapter on the economic and humanitarian impacts of the carbon economy, which include impacts of air pollution, oil spills, acid rain, biodiversity loss, etc. The number of deaths due to the carbon economy easily exceed the number of deaths that are caused directly by climate change. Indoor air pollution, mainly from primitive cooking stoves, kills more than three million people a year, mostly women. Annual deaths related to outdoor air pollution amount to 1.4 million. Costs from carbon economy related biodiversity losses, including those caused by ground-level ozone and acid rain, amount to US$ 1,750 billion per year.

Kajsa Lindqvist

Climate Vulnerability Monitor 2nd edition, 2012, DARA.

¹ DARA is is an independent non-profit organisation founded in 2003, specialising in conducting evaluations related to conflict, disasters and climate change.