Economic Impacts

Climate change will have disastrous economic, as well as ecological cost if no action is taken on emissions.

If no action is taken on emissions, there is more than a 75% chance of global temperatures rising between 2 and 3 degrees Celsius over the next 50 years, with a 50% chance that average global temperatures could rise by 5 degrees Celsius.

This will mean that glaciers, snow and ice will melt, increase flood risk in the short-term and eventually causing water shortages.

Food production yields will decline, particularly in Africa, Australia and the Mediterranean. While rising sea levels and extreme weather patterns could leave 200 million people permanently displaced [2]. And warmer weather could leave 90% of all species extinct by the end of the century.

But what do all these natural disasters mean for us?

Well, environmental changes will mean significant economic costs. In the most extreme scenarios, 6 degrees Celsius of warming will mean much of the planet will become uninhabitable, so whole economies will be wiped out.

Even in more conservative predictions, a 2-3 degrees Celsius rise in temperatures could reduce global economic output by 3%. Extreme weather could reduce global gross domestic product (GDP) by up to 1%. Whereas if temperatures rise by 5 degrees Celsius, up to 10% of global output could be lost. The poorest countries would lose much more than 10% of their output.

In the worst-case scenario, global consumption per head would fall by at least 20%.

To stabilise at manageable levels, some analysts say that emissions need to stabilise in the next 20 years and fall between 1% and 3% after that. This would cost only 1% of GDP, compared with more than 10% if we continue business as usual.

Clearly there is a business case for reducing emissions. Yet government and business leaders continue to focus on short-term profits rather than long-term economic viability.

The cost of inaction is mounting. Solutions need to be put into action now to stop worldwide economic and ecological crisis. Targets and treaties that bind nations to stopping emissions by implementing economic solutions as well as sustainable technologies are needed now, to prevent massive economic costs of adaptation now and in the future.

‘Economics’ and ‘ecology’ both come from the Greek word ‘oikos’, meaning house. Their joint-origin has enduring relevance, as our economic systems are inseparably tied into our environmental management. Global climate change will have disastrous economic, as well as ecological costs unless we prepare for our future with sound climate change solutions today.


BBC News, ‘At a Glance: the Stern Review’, 30 October 2006,

BBC News, ‘At a Glance: the Stern Review’, 30 October 2006,

Leo Murray, ‘h#mce_temp_url#’,

Mark Lynas, ‘Climate change explained – the impact of temperature rises’, The Guardian, 14 April 2009,

BBC News, ‘At a Glance: the Stern Review’, 30 October 2006,

Centre for Economic Conversion, ‘Economics, Ecology and Ethics’, University of Minnesota,