GLOBAL ECONOMY

Unchecked climate change will cost G7 'twice as much as Covid'

Activists from climate action group Ocean Rebellion set a boat on fire during a demonstration at sunrise at Marazion Beach, Cornwall, Britain, June 5, 2021, ahead of the G7 summit in Carbis Bay, Cornwall.
Activists from climate action group Ocean Rebellion set a boat on fire during a demonstration at sunrise at Marazion Beach, Cornwall, Britain, June 5, 2021, ahead of the G7 summit in Carbis Bay, Cornwall. REUTERS - TOM NICHOLSON

Climate change will cost wealthy nations twice as much as the Covid pandemic if more is not done to slash carbon emissions, researchers have warned.

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Under existing climate policies, G7 nations stand to lose 8.5 percent of GDP a year – almost 5 trillion dollars – by 2050, as temperatures rise by 2.6 degrees Celsius.

Italy and France would be the worst-hit rich countries, their economies shrinking by an estimated 11.4 and 10 percent respectively.

In comparison, the coronavirus crisis wiped an average 4.2 percent off G7 economies.

The research, by Oxfam and the Swiss Re Institute, modelled how economies would respond to “gradual, chronic climate risks” such as rising sea levels and extreme weather, as well as the associated impacts on agricultural productivity and human health.

It found the heaviest impacts would be felt by low-income nations, with India tipped to lose a quarter of its economy.

“Climate change is the long-term number one risk to the global economy, and staying where we are is not an option – we need more progress by the G7,” said Swiss Re chief economist at Jerome Haegeli.

“That means not just obligations on cutting CO2, but helping developing countries too, that’s super-important.”

Leaders' summit

The climate crisis will be on the agenda as leaders of the G7 countries – Britain, the United States, Japan, Canada, France, Germany and Italy – meet Friday in Cornwall, where they will also discuss the global economy, Covid-19 vaccines and corporate taxation.

India has been invited to attend the summit, as has Australia, South Africa and South Korea – whose economies are also predicted to pay a high price for inadequate climate policies.

An earlier study by the World Bank warned that a further 32 million to 132 million people risked being pushed into extreme poverty by the end of the decade as a result of climate change

“The economic case for climate action is clear,” said Max Lawson, head of inequality policy at Oxfam.

“Now we need G7 governments to take dramatic action in the next nine years to cut emissions and increase climate finance.” 

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