Climate Crisis Impact on the Economy

In a recent Harvard and NBER study, economists evaluated what impact the climate crisis is expected to have on the global economy. “This paper estimates that the macroeconomic damages from climate change are six times larger than previously thought. A 1 degree Celsius increase in global temperature leads to a 12% decline in world GDP.” They summarize, “A business-as-usual warming scenario leads to a present value welfare loss of 31%. These are multiple orders of magnitude above previous estimates and imply that unilateral decarbonization policy is cost effective for large countries like the United States.” (1)

The study continues, “Climate change implies precipitous declines in output, capital and consumption that reach 47% by 2100. These magnitudes are comparable to the economic damage caused by the 1929 Great Depression, but experienced permanently.”

A recent (Sept 2024) super storm in central Europe caused massive flooding, damage and loss of life; moisture laden air from an overheated Mediterranean and cool air from the northern latitudes combined with disastrous effect. (3) On the same day a storm that was not related to any hurricane dropped 18 inches of rain in 24 hours in coastal North Carolina; it was a “1000 year event”. (4)

To see this damage across the globe, happening time and time again, it is difficult to think it would not have an economic impact. Loss of property and cars, damage to infrastructure, destruction of inventory and manufacturing abilities, mold impacting health for months and years to come… loss of life…

Layer on top of flooding, the impact of massive fires around the world; apocalyptic fires in Greece, Canada, Brazil, the western US; there are currently 3 large fires in Orange County, CA, surrounding Los Angeles, one of the largest cities in the US. Evacuation orders disrupt commerce and daily life; Air pollution is life threatening to those with asthma and the elderly; Outdoor work becomes difficult and delayed.

Another dimension of the climate crisis is rising heat that creates higher temperatures and wet bulb temps. This factor affects the ability of humans to survive. The human limit according to physicians is 35 degrees Celsius. Without shade and unlimited water to drink, humans will die after 6 hours. In Asia, India and the Middle East 2024 saw wet bulb temps above 50 degrees Celsius. (5)

Another impact of higher temperatures is the impact on the food chain. Plants growth slows or stops in temperatures over 32 Degrees Celsius. High temperatures reduce yields on crops driving up food prices. Higher temperatures also lead to evapotranspiration drawing water from the soil and starving plants. (6)

We are living through the climate crisis… it is not some day in the future, it is now. According to Ann Mettler, vice president for Europe at Breakthrough Energy, “Climate policy is not keeping pace with the acceleration of climate change… whatever that cost, would pale in comparison to what these extreme weather events cost.” Recent policies like the Inflation Reduction Act have helped drive progress towards the US reaching Net Zero. (2)

It is crucial that we take action to decarbonize the economy. Divestment from fossil fuels and animal agriculture is a key first step to stop funding the climate crisis. We need to rethink our economic foundation and prioritize real Degrowth, building local community and resilience. We can not continue as we always have.

To learn more and discuss options contact me at james.cox@glic.com

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Email: james.cox@glic.com
PAS 150 South Warner Rd. Suite 120 King of Prussia, PA 19406

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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 150 S. Warner Road, Suite 120, King of Prussia, PA 19406 (610)293-8300. Securities products and advisory services offered through PAS, member FINRA, SIPC. PAS is a wholly owned subsidiary of Guardian.

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2024- 7029092 exp 9/26

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