New study finds cutting greenhouse gas emissions to net zero will save significant damage to the UK economy
Climate change impacts could cause damage to the UK equivalent to cutting the size of the economy by at least 7.4 per cent by the end of this century, unless there are stronger reductions in global greenhouse gas emissions, according to a report published today (30 May 2022) by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science.
A team of researchers in the UK and United States analysed a range of previous studies to estimate the likely consequences of climate change from “catastrophic disruption to the global economic system” and direct effects across nine “impact channels”, including agriculture, livestock and fisheries, drought, flooding and coastal damage.
The researchers assumed that current climate policies worldwide would lead to a global temperature that is 3.9 Celsius degrees higher than its pre-industrial level by 2100. Total climate change costs were found to increase from the equivalent of 1.1 per cent of UK gross domestic product (GDP) at present, to 3.3 per cent by 2050, and 7.4 per cent by 2100.
Cutting global emissions to net zero by 2075 would limit warming to 2.1 Celsius degrees by 2100 compared with pre-industrial level, and would slash the costs the damage to the UK from climate impacts to the equivalent of 2.4 per cent of GDP, a decrease of 5.0 percentage points compared with climate change losses to the UK economy resulting from current policies worldwide.
Dr James Rising, who led the analysis at the University of Delaware, said: “These estimates provide both a stark warning of the future economic damage to the UK resulting from a lack of climate action, and a comparison between the costs of climate change impacts and the costs of reducing emissions”.
“We estimate that the mitigation costs involved in the UK’s pathway to net zero by 2050 are unlikely to exceed the equivalent of 2 per cent of GDP over the transition period. Furthermore, climate mitigation policies bring additional benefits, for example by improving health and invigorating of the economy through investment, equivalent to an increase of 6.1 per cent in GDP by the end of this century.”
The researchers found that achieving the UK’s net zero target would provide added benefits to the UK beyond avoided climate impacts that would be equivalent to an increase of 3.3 per cent in GDP. They would also provide a further boost of 2.8 per cent to the UK’s economy by stimulating investment in green industries and infrastructure.
Altogether, a scenario in which the UK reaches net zero emissions by 2050, and the world as a whole achieves the same target by 2075, would result in net economic benefits to the UK economy by the end of the century that would be equivalent to an increase in GDP of 9.1 per cent.
The researchers found that the largest economic risk under current policies is from “catastrophic disruption to the global economic system”, which could cause losses to the UK by 2100 equivalent to 4.1 per cent of GDP by 2100.
Disruption to foreign trade as countries elsewhere in the world experience losses from climate change would cause additional damage to the UK equivalent to 1.1 per cent of GDP.
The researchers also concluded that the health benefits from less extreme winters in the North of the UK will be overshadowed by heat impacts across the country, increasing the death rate by 7.1 deaths per 100,000 people by 2100 under current policies, equivalent to a 0.4 per cent reduction in GDP.
However, cutting emissions strongly would reduce the rate of heat-related deaths to 0.9 per 100,000 people, equivalent to a 0.05 per cent increase in GDP.
The analysis also revealed that the weakening of the Gulf Stream in the North Atlantic due to climate change could devastate UK agriculture (which currently generates 0.6 per cent of UK GDP), resulting in a loss equivalent to 0.25 per cent of GDP under current policies. However, strongly cutting emissions would reduce the losses to the equivalent of just 0.02 per cent of GDP.
For further information about the study, or a copy of ‘What will climate change cost the UK? Risks, impacts and mitigation for the net-zero transition’, please contact Bob Ward on email@example.com or +44 (0) 7811 320346.
Notes to Editors
The Grantham Research Institute on Climate Change and the Environment was established in 2008 at the London School of Economics and Political Science. The Institute brings together international expertise on economics, as well as finance, geography, the environment, international development and political economy to establish a world-leading centre for policy- relevant research, teaching and training in climate change and the environment. It has an active body of work on sustainable finance, including carbon assessment, central banks, the just transition, resilience and sovereign bonds. It is funded by the Grantham Foundation for the Protection of the Environment, which also funds the Grantham Institute – Climate Change and Environment at Imperial College London. www.lse.ac.uk/grantham/