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Climate Change to Cost Economy $38 Trillion Each Year by 2049

A new study has found that the global economic burden of climate change will reach about $38 trillion a year by 2049, reported the Associated Press (AP).

The study, conducted by researchers at Germany’s Potsdam Institute for Climate Impact Research and published in Nature journal, said that climate change will impact future global income, reducing it by about 19% in the next 25 years.

The biggest monetary impact will be felt by people in the poorest areas despite their minimal contribution to the planet’s warming. The study also expected that by 2100, the financial cost could be double the previous estimates.

Leonie Wenz, study co-author and a climate scientist and economist, said their analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries across the world.

According to Wenz, highly-developed countries such as Germany and the US will witness a projected median income reduction of 11% each and France 13%.

These damages are measured against a baseline without climate change and then accounted for in the expected growth in gross domestic product, explained the study lead author Max Kotz.

So despite the projected 19% decrease in global income compared to a world with no climate change, most places will still experience income growth but not as much because of higher temperatures.

The study showed that the southeastern and southwestern states of the US face economic strain more than the northern states, with parts of Arizona and New Mexico taking the biggest monetary hit.

While in Europe, southern regions, including parts of Spain and Italy, experience more impact than places like Denmark or northern Germany.

According to the study’s calculations, the world’s poorest countries stand to lose 61% more in income than the richest ones.

Kotz said that this new study examined 1,600 global areas that are smaller than countries, taking into account several factors and examining how long climate economic shocks last.

The study shows that over the next 25 years, emission cuts won’t have a major impact on reducing income losses. But cutting carbon emissions now will have an impact in mitigating climate change’s economic damages in the second half of this century, Kotz added.

According to Kotz, limiting global warming to 2 degrees Celsius could keep financial losses at around 20%. But in the worst case scenario, emissions increase could cause a financial hit at around 60%.

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