Extremes are increasing
How much money does climate change cost?
By Christine Leitner
April 27, 2024, 6:47 p.m
Since the turn of the century, Germany has paid 145 billion euros for the consequences of climate change. And it could be much more. Do we soon need a financial injection because of global warming? Not necessarily.
It was the most memorable environmental disaster in recent German history – and probably also the most expensive to date: the grand coalition had to fork out more than 40 billion euros to repair what huge masses of water had swept away in the Ahr Valley in July 2021. No natural disaster in the Federal Republic has ever consumed so much money at once. But that can change: the federal government estimates that a further 280 to 900 billion euros could be raised by 2050.
How much climate change will burden the federal budget in the future depends on how much the federal government and the signatory states to the Paris Climate Agreement do to combat global warming. But it is already getting more expensive, a research team from the Potsdam Institute for Climate Impact Research (PIK) has calculated. If emissions were to be drastically reduced from now on, around 19 percent of the global community’s income would be used to repair damage caused by climate change. The bottom line is that global warming could cost all countries in the world together 36 trillion euros by the middle of the century.
For their study, published in the journal Nature, the PIK researchers examined how temperature fluctuations and rainfall distribution have influenced economic growth over the last 40 years. With the help of climate models, they were able to continue the development until 2050. The bill is therefore highest for South Asia and Africa. These regions contribute comparatively little to global warming, but could lose more than 20 percent of their income in the future due to weather extremes. One reason for this is the dependence on agriculture, whose yields are falling due to climate change.
“Our study illustrates the considerable inequality of climate impacts: Although we notice impacts everywhere, the tropical countries are most affected,” says Andreas Levermann, study author and head of the complexity research department at PIK, according to the statement. North America and Europe, among others the main culprits of climate change, are only expected to lose 11 percent of their income. However, the study did not take into account forest fires, storms and the consequences for human health – they could drive up costs even further.
“The warmer, the worse”
The United Nations International Labor Organization (ILO) estimates that between two and more than three billion workers are already exposed to excessive heat at some point during their working hours. Almost 19,000 people die at work every year because of this. A connection to climate change has already been established in numerous diseases: for example skin cancer, cardiovascular or respiratory diseases or macular degeneration, which can destroy vision.
There are several reasons why different countries are affected to different degrees. On the one hand, global warming has different effects depending on the region. At a certain point, however, the following applies: the warmer, the worse for the economy, says study author Levermann, summarizing the results.
In addition to the temperature, the protection options also play a role. The research team also found that those who can adapt get off significantly cheaper. Damage costs six times as much as effective climate protection, according to the study. But the countries of the Global South in particular lack money – which means they are more affected by climate change.
Climate change is also causing costs in the global north – for example in the energy transition. However, these are investments that in turn create jobs, increase productivity and thus stimulate the economy. In some cases this also applies to damage caused by natural and climate disasters, because the clean-up work also means productivity.
However, unforeseen weather events can also hinder supply chains and production. Companies must prepare for this and adapt accordingly. The climate models clearly show that the weather will become more extreme and chaotic in the future.
This text first appeared at stern.de