The huge economic cost of not taking action on climate change

There is a strong economic case for investing in climate mitigation and adaptation because there are significant economic consequences of failing to do so, according to a new report.

The report says that allowing global warming to reach 3°C by 2100 could reduce cumulative economic output by 15% to 34%. Alternatively, investing 1% to 2% in mitigation and adaptation would limit warming to 2°C, reducing economic damages to 2% to 4%. This net cost of inaction is equivalent to 11% to 27% of cumulative GDP – equivalent to three times global healthcare spending, or eight times the amount needed to lift the world above the global poverty line by 2100.

Forest in California with panoramic aerial wildfire is burning trees smoke fire dry grass

The report,?Too Hot to Think Straight, Too Cold to Panic: Landing the Economic Case for Climate Action With Decision Makers, is published today by Boston Consulting Group’s Climate Change and Sustainability?Consulting experts, Cambridge Judge Business School and the University of Cambridge’s climaTraces Lab.

“Research on climate change impacts across all regions and sectors is expanding rapidly,” said co-author Gates Cambridge Scholar Kamiar Mohaddes, an Associate Professor in Economics and Policy at the Cambridge Judge Business School and Co-Director of the University of Cambridge climaTRACES Lab. “What stands out is that productivity loss – not merely capital destruction – is the primary driver of economic damage. It is also clear that climate change will reduce income in all countries and across all sectors, affecting industries ranging from transport to manufacturing and retail, not only agriculture and other sectors commonly associated with nature.”

Read more here.