Climate risks: A clear and present danger for global economy

Just as the world has seen record land and sea temperatures in 2023, so some research models have for long suggested up to a quarter of global GDP could be lost if no action is taken to reduce carbon dioxide emissions.
The target of keeping long-term global warming within 1.5 degrees Celsius (2.7 Fahrenheit) is moving out of reach, climate experts say, with nations failing to set more ambitious goals despite months of record-breaking heat on land and sea.
As envoys gathered in Bonn in early June to prepare for this year’s annual climate talks in November, average global surface air temperatures were more than 1.5C above pre-industrial levels for several days, the European Union-funded Copernicus Climate Change Service (C3S) said.
Though mean temperatures had temporarily breached the 1.5C threshold before, this was the first time they had done so in the northern hemisphere summer that starts on June 1. Sea temperatures also broke April and May records.
Temperatures broke June records in the Chinese capital Beijing, and extreme heatwaves have hit the US.
Parts of North America were some 10C above the seasonal average this month, and smoke from forest fires blanketed Canada and the US East Coast in hazardous haze, with carbon emissions estimated at a record 160mn metric tonnes.
In India, one of the most climate vulnerable regions, deaths were reported to have spiked as a result of sustained high temperatures.
Countries agreed in Paris in 2015 to try to keep long-term average temperature rises within 1.5C, but there is now a 66% likelihood the annual mean will cross the 1.5C threshold for at least one whole year between now and 2027, the World Meteorological Organization predicted in May.
The impact of climate change has been forecasted to be the hardest hit for Asian economies, with a 5.5% hit to GDP in the best-case scenario, and 26.5% hit in a severe scenario by 2050.
The Middle East and Africa, meanwhile, would see a drop of 4.7% if temperature rises stay below 2°C and 27.6°C in the severe case scenario, according to a Swiss Re Institute report in 2021.
Over the last few years, an ecosystem of climate pledges, groups and models has expanded on Wall Street in a bid to cut — or appear to cut — the financial industry’s role in global warming.
But many of those efforts have had a limited impact on thwarting the damage inflicted by climate change, according to researchers at Columbia University.
Almost $200tn of investment is needed by 2050 to reach net-zero emissions, researchers at BloombergNEF estimate.
In a wider sense, the unsustainability of the linear pattern of global production and consumption has never been more obvious.
Some 400mn tonnes of heavy metal, toxic sludge, and industrial waste are estimated to be dumped into the world’s waterways every year, while at least 8mn tonnes of plastic end up in the oceans.
Some 1.3bn tonnes of food – about one-third of global production – is lost or wasted, while hundreds of millions of people go hungry.
People are now challenging the sustainability of this linear model and urging a so-called circular economy of take, make, use, reuse and reuse again and again.
The climate impact could be disproportionately damaging to developing economies.
The world’s 100 poorest countries could be 5% worse off by the end of the century with climate change – wiping trillions of dollars from the global economy every year – according to research findings by the University of Sussex and La Sapienza economists in early 2018.
Experts agree that the impact of climate change can be lessened if more decisive action is taken to meet the targets of the Paris Agreement.
For sure, a collective global effort to enact stricter carbon emissions policies is a must to deal with global warming concerns.