Did you know? Climate change is a salary and pension thief!
A recent study published in the internationally renowned journal Nature estimates that climate change will cause economic losses of $38 trillion annually by 2049. By 2100, these losses could double.
How big is a $38 trillion loss? It's roughly twice the entire EU's annual GDP, 1.5 times the US's annual GDP, or nearly 30 times Taiwan's GDP in 2023.
The paper examined the economic impacts of climate change on more than 1,600 regions over the past 40 years, examining how changes in average annual temperature affect economic growth rates. It then used computer simulations to predict future trends. The results found that, compared to a "no warming" scenario, climate change would lead to an 18.8% reduction in global per capita income over 26 years.
While almost all countries will face economic losses, the biggest losses will be felt by the poorest nations, those with the lowest historical carbon emissions and the least responsibility for their emissions. The study estimates that the world's poorest nations will suffer 61% higher income losses than the richest nations, while those with the lowest historical carbon emissions will suffer 40% higher income losses than those with the highest historical carbon emissions.
"These phenomena once again highlight the pervasive injustices in climate shocks," the paper said.
From a regional perspective, wealthy North America and Europe will suffer the least, with per capita income expected to decline by 11%; Southeast Asia and East Asia, where Taiwan is located, are expected to see a decrease of 19%, slightly higher than the global average; the worst hit are South Asia and Africa, where income will decrease by more than 22%.
This only looks at lost income, but climate change also increases other costs of living.
Global consulting firm ICF estimates that if we continue with business as usual and do not actively reduce emissions, resulting in global warming exceeding 4°C by the end of this century, under this "high emissions" scenario, American babies born in 2024 may pay a "lifetime personal cost" of climate change of up to US$500,000 (approximately NT$16 million) by the time they reach 80 years old.
What exactly does this 16 million miles encompass?
Enlightened Housing: Frequent extreme weather events such as hurricanes and floods lead to increased costs for housing maintenance, repair, and insurance, with lifetime housing costs expected to increase by US$125,000 (approximately NT$4.07 million);
Enlightened Food: Extreme climate impacts on agriculture and supply chains have led to a lifetime food price increase of US$33,000 (approximately NT$1.07 million);
Enlightened Energy and Transportation: Extreme weather threatens energy infrastructure and supply, leading to rising electricity, oil, gas, and even auto insurance prices. Furthermore, heat waves are forcing people to turn up their air conditioners more frequently, with an estimated lifetime cost increase of US$92,000 (approximately NT$2.99 million).
Enlightened Healthcare: Heat cramps, heat fatigue, and heat stroke caused by heat waves aggravate the condition and mortality of patients with cardiovascular and respiratory diseases, resulting in an increase of US$5,000 (approximately NT$160,000) in lifetime medical and health costs;
Enlightened tax payment: Extreme climate causes economic losses and also erodes tax revenue. The government needs to provide relief and rebuild, and has no money but to increase taxes. Therefore, people born this year will have to pay an additional US$200,000 in taxes (approximately NT$6.51 million) in their lifetime.
In the end, everything went up except for lifetime income, which was down by US$25,000 (approximately NT$880,000) because of reduced working hours due to extreme weather and health risks.
Expenses increase, income decreases, and people become poorer.
"Climate change will increase the cost of living by 9%, and for many Americans, these financial losses will force them to make difficult decisions about food, housing, and other daily expenses," the ICF survey report said.
However, the ICF says these figures are underestimates. If retirement investment losses are included, the losses would almost double immediately. Furthermore, the report's tax estimates do not factor in increased defense spending (the US Department of Defense is elevating climate change to a national security priority), risks to federal mortgages (whether due to extreme weather conditions leading to full or partial loss of loan collateral), and damage to federal buildings and facilities. Otherwise, the increases would be even higher. Furthermore, these calculations are based on 2024 prices; with inflation, the actual cost of living increases are likely to be even greater.
The numbers are scary, but the authors of the Nature paper say it is not the end of the world and there is still hope.
We can choose to swallow $38 trillion in economic losses or invest $6 trillion – less than one-sixth of the losses – to keep warming to 2°C.
While the paper says last-minute emissions cuts now will have little impact on reducing income losses before 2050, they could shape the future of the second half of the century. If we can limit warming to 2°C, economic losses would be limited to 20% of global income; if we lose control, the worst-case scenario would see losses approaching 60%.
The ICF report also reached a similar conclusion. Under a low-emissions scenario (carbon peak in 2080, with a temperature increase of 1.5°C), economic losses would be far less than $500,000 to $1 million. The additional tax payments would also drop from $200,000 to $5,200, a 97.4% decrease. Losses could even turn into profits. For example, by investing in companies developing climate mitigation or adaptation technologies, those born this year could earn an additional $25,000 in "low-carbon transition premiums," rather than losses.
As the old saying goes, only by keeping the temperature under 2°C can we control economic losses, prevent salaries from shrinking, and prevent our capital from being eaten away.
This article is reprinted with permission from CSR@Tianxia. The original title is "Climate change will make the next generation poorer! Americans born in 2024 will spend at least $16 million more on housing, food, and healthcare throughout their lives." It is not licensed under the Creative Commons license.
Source: Environmental Information Center
