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Study: 7% of World’s GDP Will Vanish Because of Climate Change

Whether rich, poor, hot or cold, climate change will shrink the gross domestic products of “virtually all” nations if the current trajectory of carbon emissions persists, a new study claims.

In fact, 7 percent of the world’s GDP will evaporate by 2100, including 10 percent of all incomes in Canada and the United States, according to researchers from the University of Cambridge, University of Southern California, Johns Hopkins University, National Tsing Hua University and the International Monetary Fund. Their findings were published last week by the National Bureau of Economic Research.

“Whether cold snaps or heat waves, droughts, floods or natural disasters, all deviations of climate conditions from their historical norms have adverse economic effects,” Kamiar Mohaddes, a senior lecturer at Cambridge’s Faculty of Economics and a co-author of the study, said in a statement. “Without mitigation and adaptation policies, many countries are likely to experience sustained temperature increases relative to historical norms and suffer major income losses as a result. This holds for both rich and poor countries as well as hot and cold regions.”

The Intergovernmental Panel on Climate Change, in a business-as-usual scenario, projects average global temperatures to rise to an upper limit of 4.8 degrees Celsius by century’s end. This would cause the United States to shed 10.5 percent of its GDP by 2100—a “substantial economic hit,” researchers said.

Even colder countries like Canada, which some analysts suggest may see economic gains as average annual temperatures approach the “Goldilocks zone” of 13 degrees Celsius, could yield more than 13 percent of its income by 2100.

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“Canada is warming up twice as fast as rest of the world,” Mohaddes said. “There are risks to its physical infrastructure, coastal and northern communities, human health and wellness, ecosystems and fisheries—all of which has a cost.”

Maintaining Paris Agreement limits of roughly 3 degrees Celsius of warming over preindustrial levels this century, on the other hand, will curb the losses of both North American nations to under 2 percent of their respective GDPs, he added.

Other countries primed to lose big unless robust action is taken include Switzerland, which researchers say is “likely” to see its economy downsized by 12 percent by 2100. Japan, India and New Zealand are likewise expected to relinquish an estimated 10 percent of their incomes, Russia 9 percent and the United Kingdom 4 percent.

Despite claims of resiliency from advanced nations, extreme heat, intense flooding, drought and freeze—all aspects of climate change—don’t discriminate between the haves and have-nots, Mohaddes said.

“The economics of climate change stretch far beyond the impact on growing crops,” he said. “Heavy rainfall prevents mountain access for mining and affects commodity prices. Cold snaps raise heating bills and high street spending drops. Heatwaves cause transport networks to shut down. All these things add up. The idea that rich, temperate nations are economically immune to climate change, or could even double and triple their wealth as a result, just seems implausible.”

If advanced nations want to safeguard against major economic damage in the coming decades, the Paris Agreement is “a good start,” he said.

The fashion industry, which currently accounts for 8.1 percent of global carbon emissions, creates roughly 1.2 billion tons of greenhouse gases a year, or more than those produced by international flights and maritime shipping combined, according to the nonprofit Ellen MacArthur Foundation. If no action is taken, the United Nations (UN) notes, the textile sector’s carbon emissions are expected to balloon by 60 percent by 2030.

The UN-led Fashion Industry Charter for Climate Action, whose 40 members include Adidas, Burberry, Esprit, Guess, Gap, Hugo Boss, H&M, Inditex, Kering, Levi Strauss, Puma, Stella McCartney, Target and Maersk, committed last year to an initial target of 30 percent greenhouse-gas emission reductions by 2020, with an eye on collectively achieving net-zero emissions by 2050 through measures such as decarbonizing the production phase, selecting climate-friendly and sustainable materials and promoting low-carbon transport. The newly launched G7 Fashion Pact, which shares many of the same members and targets as the UN charter, has also made zero greenhouse-gas emissions by 2050 an objective.