Open-access content [Tanya Weaver](/authors/tanya-weaver) — Tue 1 Apr 2025
**A 4°C rise in global temperatures would cut global GDP by around 40% by the end of the century, according to a study by Australian researchers.**
According to the World Economic Forum, the global cost of climate change damage is estimated to reach between [$1.7 and $3.1tn](https://eandt.theiet.org/2024/06/11/extreme-weather-causes-41bn-damages-and-2500-deaths-just-six-months) a year by 2050. However, previous studies on the impact of climate change on global GDP has revealed it only has a mild to moderate affect.
These economic models assume that a country’s economy is affected only by weather in that country, and not how flooding, for instance, in other country will affect its food supply.
Researchers at the University of New South Wales’ Institute for Climate Risk and Response (ICRR) decided to address this issue by creating a new model.
Having included the global repercussions of extreme weather in its models, the predicted harm to global GDP was far worse than previously thought.
The analysis immediately revealed that a warm year across the planet causes lower global growth.
The study took three leading economic models to account for the effects of global weather on national economies and enhanced it with climate change forecasts to capture the impacts of extreme weather events across global supply chains. The analysis focused on global GDP per capita.
The results revealed that if the Earth warms by more than 3°C by the end of the century, the estimated harm to the global economy jumped from an average of 11% (under previous modelling assumptions) to 40%.
Timothy Neal, lead researcher and senior lecturer at the ICRR, said: “Economists have traditionally looked at historical data comparing weather events to economic growth to cost climate damages.
“What they fail to account for are interruptions to the global supply chains currently buffering economic shocks. In a hotter future, we can expect cascading supply chain disruptions triggered by extreme weather events worldwide.”
According to the researchers, the updated projection of 40% should underscore to all countries how vulnerable they are to climate change.
Neal said: “There’s an assumption that some colder countries, like Russia or Canada, will benefit from climate change, but supply chain dependencies mean no country is immune.”
The research team said that even its updated models are inconclusive as they don’t account for climate adaptation, such as human migration, which is politically and logistically complex.
Neal said: “We continue learning from how we see climate change impacting our economy right now, from rising food prices to insurance costs, and we need to be responsive to new information if we're going to act in our best interest.”
The new study – ‘Reconsidering the macroeconomic damage of severe warming’ – has been published in the journal _Environmental Research Letters_.
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