Economic Benefits of Combating Climate Change Highlighted in New Study

According to a recent study conducted by the Boston Consulting Group and the University of Cambridge, the economic implications of inaction against climate change could be dire. Should global temperatures rise by 3 degrees Celsius compared to pre-industrial levels by the year 2100, the world could see a decrease in economic output ranging from 15% to 34%. This alarming prediction underscores the urgent need for immediate action to mitigate climate change impacts.

The study emphasizes that proactive efforts to limit global warming could significantly reduce economic damages. To keep the temperature increase to within 2 degrees Celsius--a target aligned with the Paris Agreement--investments equivalent to 1% to 2% of global economic output are necessary. These investments would not only help in reducing emissions but also in adapting to the inevitable changes brought on by climate change, potentially limiting economic losses to about 2% to 4% of global GDP.

Recent data from the EU's Copernicus Climate Change Service indicates that the year 2024 was 1.6 degrees Celsius warmer than the average temperature recorded between 1850 and 1900, marking the last decade (2015-2024) as the hottest in recorded history. This trend has serious implications for global weather patterns, agriculture, and human migration, further underscoring the need for decisive action.

Notably, the economic report details that the loss of productivity, rather than just capital, will primarily drive economic damage in the event of unchecked climate change. The study suggests that investments in climate mitigation can yield significant returns, potentially generating 5 to 14 times the initial investment. However, to achieve the 2-degree target, spending on mitigation strategies would need to increase nine-fold, while adaptation-related expenditures would need to grow thirteen-fold. To be effective, 60% of these investments should ideally be made before 2050, as it is projected that 95% of the economic damages will occur after this period.

The researchers based their predictions on historical growth rates while accounting for anticipated slowdowns in more developed economies alongside declining population growth. Their calculations are conservative, notably excluding potential tipping points that could accelerate climate change dramatically.