Climate Change Takes Heavy Toll on Global Economy, Hits Developing Nations Hard: Report Ahead of COP28

A recent report from the University of Delaware, published on Tuesday ahead of the COP28 climate negotiations, reveals that climate change is already exerting a substantial economic toll on the world, with developing nations facing the brunt of the impact. The report estimates that the consequences of human-caused climate change led to a 6.3% reduction in global economic output last year when considering population-weighted factors. These effects encompass direct outcomes of climate change, such as disruptions in agriculture and manufacturing, decreased productivity due to extreme heat, and spillover impacts on global trade and investments.

Lead author James Rising of the University of Delaware emphasized, "The world is trillions of dollars poorer because of climate change, and most of that burden has fallen on poor countries." The report indicates a pressing need for urgent support to address the challenges faced by many countries today.

Without factoring in impacts borne by the average person, the global GDP loss stood at 1.8%, equivalent to about $1.5 trillion in 2022. This disparity underscores the uneven distribution of impacts, concentrating in low-income countries and tropical regions with larger populations and lower GDP.

The report highlights that the least developed countries experienced a higher population-weighted GDP loss of 8.3%. Southeast Asia and Southern Africa were particularly affected, witnessing losses of 14.1% and 11.2% of their GDP, respectively. While some developed countries, such as Europe, saw a nearly 5% net gain in GDP last year due to warmer winters, the report warns that such gains are "poised to erode" as hotter summers offset milder winters.

Addressing the economic disparities resulting from climate change, nations agreed at last year's COP27 talks in Egypt to establish a dedicated fund to assist vulnerable countries in coping with "loss and damage" from climate disasters and extreme weather. However, details of the fund, including contributors and amounts, remain key negotiation points at the upcoming COP28 talks in Dubai, commencing on Thursday.

The report underscores that low- and middle-income countries have collectively experienced a loss in capital and GDP totaling $21 trillion over the past 30 years. This represents about half of the total 2023 GDP of the developing world. The authors note that these losses are "conservative estimates" as the analysis does not account for non-market losses and impacts.

As the world prepares for the COP28 discussions, the report adds urgency to the need for comprehensive and equitable solutions to mitigate the economic impacts of climate change, particularly in the most vulnerable regions.