A rise of four degrees in global temperatures would cut world Gross Domestic Product (GDP) by 40 percent by 2100, new modelling shows.
The UNSW Institute for Climate Risk & Response (ICRR) analysis says this fall would be 11 percent higher than previously forecast.
The ICRR said the results supported limiting global warming to 1.7 °C, which is in line with significantly faster decarbonisation goals like the Paris Agreement.
Lead researcher Timothy Neal said the analysis used traditional economic frameworks that weighed immediate transition costs against long term climate damages.
Dr Neal said economists had traditionally looked at historical data comparing weather events to economic growth to cost climate damages.
This failed to account for interruptions to the global supply chains currently buffering economic shocks.
“In a hotter future, we can expect cascading supply chain disruptions triggered by extreme weather events worldwide,” Dr Neal said.
“Because these damages haven’t been taken into account, prior economic models have inadvertently concluded that even severe climate change wasn’t a big problem for the economy – and it’s had profound implications for climate policy.”
Dr Neal says the updated projection should underscore to all nations that they are vulnerable to climate change.
“There’s an assumption that some colder countries, like Russia or Canada, will benefit from climate change, but supply chain dependencies mean no country is immune,” he said.
The full report is on the University of NSW website.
