The cost of climate change on economic growth: Study examines impact of rising global temperatures on GDP – Science Daily

by | Aug 10, 2022 | Financial

From crop damage to cooling failures at cloud-based data centers, climate change affects a wide variety of economic sectors. It’s unclear whether a country’s economy can bounce back each year from these impacts or if global temperature increases cause permanent and cumulative impacts on the market economy.
A study from the University of California, Davis, published today by IOP Publishing in the journal Environmental Research Letters, addresses this fundamental question, which underlies the costs and benefits of climate change policy. The researchuses an empirical approach to revisit the effect of rising global temperatures and climate change on Gross Domestic Product, or GDP.
It found that economies are sensitive to persistent temperature shocks over at least a 10-year time frame and impacts economic growth in about 22% percent of the countries analyzed.
“Our results suggest that many countries are likely experiencing persistent temperature effects,” said lead author Bernardo Bastien-Olvera, a Ph.D. candidate at UC Davis. “This contrasts with models that calculate metrics like the social cost of carbon, which mostly assume temporary temperature impacts on GDP. Our research adds to the evidence suggesting that impacts are far more uncertain and potentially larger than previously thought.”
Persistent and cumulative
Previous research examined the question by estimating the delayed effect of temperature on GDP in subsequent years, but the results were inconclusi …

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