Economic Impact of Climate Change and its Implications for Sustainable Development Goals

Executive Summary

A recent study by the climaTRACES Lab at the University of Cambridge highlights the severe economic repercussions of unmitigated climate change, directly threatening the achievement of several Sustainable Development Goals (SDGs). The research indicates that without substantial action to curb greenhouse gas emissions, global gross domestic product (GDP) per capita could decline significantly by 2100. This report analyzes these findings in the context of the global commitment to the SDGs, particularly those concerning climate action, economic growth, and inequality.

Key Findings of the Cambridge Study

The research, published in PLOS Climate, provides quantitative projections of the economic damage caused by rising average temperatures across 174 countries. The findings underscore the universal nature of the threat, affecting all nations regardless of their economic status or geographic location.

• Universal Economic Threat: The study concludes that no country is immune to the economic consequences of climate change, challenging the assumption that only tropical or agrarian economies are vulnerable. This poses a direct threat to SDG 8 (Decent Work and Economic Growth) on a global scale.
• Projected GDP Losses: The report outlines several scenarios based on warming rates:
  1. Extreme Scenario (0.04°C annual warming): A potential global GDP per capita loss of 20–24% by 2100.
  2. Moderate Scenario: A projected decline of approximately 10–11% in global GDP per capita.
• Sectoral Impact: Beyond agriculture, key sectors such as transportation, manufacturing, and retail are identified as being directly affected, impacting progress towards SDG 9 (Industry, Innovation, and Infrastructure).

Implications for SDG 13: Climate Action

The study’s core message is a stark warning about the consequences of failing to meet the objectives of SDG 13 (Climate Action). It reinforces the urgency of implementing robust mitigation strategies as outlined in international agreements.

• Insufficiency of Adaptation: While adaptation measures like improved infrastructure are acknowledged, the research confirms they are insufficient to fully offset the economic losses from global warming. This emphasizes that mitigation is non-negotiable for sustainable development.
• The Paris Agreement Dividend: Conversely, adhering to the Paris Agreement targets (limiting warming to 0.01°C per year) is projected to increase global income by approximately 0.25% compared to historical trends. This demonstrates that climate action is not only a necessity for environmental protection but also a driver of economic prosperity, aligning with the principles of SDG 8.

Socio-Economic Consequences and SDGs 1, 8, & 10

The economic downturn predicted by the study would have profound social consequences, severely hampering progress on goals related to poverty, inequality, and economic stability.

• Threat to SDG 1 (No Poverty): A significant reduction in global GDP would undermine poverty alleviation efforts worldwide.
• Exacerbation of Inequality (SDG 10): The research indicates that hotter, low-income countries are disproportionately vulnerable, facing potential economic losses 30–60% higher than the global average. This would widen the gap between developed and developing nations, directly contradicting the aim of SDG 10 (Reduced Inequalities).
• Undermining SDG 8 (Decent Work and Economic Growth): The projected income reduction across all countries represents a fundamental threat to the sustained, inclusive, and sustainable economic growth envisioned in SDG 8.

Conclusion: The Imperative for Global Cooperation

The findings from the University of Cambridge present a clear economic case for immediate and decisive climate action. The interconnectedness of the climate crisis with economic stability and social equity underscores the indivisible nature of the Sustainable Development Goals. Achieving the Paris Agreement targets is not merely an environmental goal but a prerequisite for securing a sustainable economic future and fulfilling the global commitments to eradicate poverty, reduce inequality, and ensure prosperity for all, in line with SDG 17 (Partnerships for the Goals).

SDGs Addressed in the Article

1. SDG 13: Climate Action

   • The entire article is centered on the “threat of climate crisis,” “global warming,” and the consequences of increased “greenhouse gas emissions.” It discusses the need for “serious mitigation measures” and references the Paris Agreement, which are core components of SDG 13.

2. SDG 8: Decent Work and Economic Growth

   • The article’s primary focus is the economic impact of climate change, specifically how it “directly targets the foundations of the global economy.” It warns that “global gross domestic product (GDP) per capita could fall by more than 10 percent,” which directly relates to the goal of sustaining economic growth. It also notes that sectors like “transportation, manufacturing, and retail” will be affected, highlighting the broad economic threat.

3. SDG 10: Reduced Inequalities

   • The article points out the disproportionate impact of climate change, stating that “hotter and low-income countries might face economic losses 30–60 per cent above the global average.” This highlights how climate change can exacerbate economic inequalities between nations, a key concern of SDG 10.

4. SDG 1: No Poverty

   • Although not explicitly named, this goal is highly relevant. A significant decline in GDP per capita, especially in “low-income countries,” would severely hinder efforts to eradicate poverty. The article notes that climate change “reduces income in all countries, hot and cold, rich and poor alike,” with the poor being the most vulnerable to such income shocks.

5. SDG 17: Partnerships for the Goals

   • The mention of the “2015 Paris Agreement” directly invokes the concept of global partnerships. This international agreement represents a collective effort by many countries to combat climate change, which is the essence of SDG 17’s focus on collaboration to achieve sustainable development.

Specific SDG Targets Identified

1. SDG 13: Climate Action

   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
     • The article mentions that “adaptation protocols—such as infrastructure improvements and agricultural systems—can reduce the impact,” directly referencing the concept of building adaptive capacity. However, it also warns that these measures are not sufficient on their own.
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.
     • The article’s call for “serious mitigation measures” and its reference to the Paris Agreement, which requires nations to set their own emission reduction targets, aligns with the integration of climate action into national planning.

2. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.
     • The article directly addresses this target by warning that climate change will cause “global GDP per capita losses” of 10-24% by 2100 without mitigation, representing a direct threat to sustained economic growth.

3. SDG 10: Reduced Inequalities

   • Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average.
     • The finding that “low-income countries might face economic losses 30–60 per cent above the global average” indicates that climate change will disproportionately harm the poorest nations, making it harder to achieve this target of equitable income growth.

Indicators for Measuring Progress

1. Indicator for SDG 8 (Target 8.1)

   • Indicator: Annual growth rate of real GDP per capita.
     • The article explicitly and repeatedly uses “global gross domestic product (GDP) per capita” as the central metric to quantify the economic damage of climate change. It projects a potential fall of “more than 10 percent” or even “20–24 percent by 2100.”

2. Indicator for SDG 13 (Target 13.2)

   • Indicator: Rate of increase in global average temperature (related to official indicator 13.2.2 on total greenhouse gas emissions).
     • The article uses different warming scenarios to model economic impact, such as an “extreme scenarios with a warming rate of 0.04 degrees Celsius per year” versus the Paris Agreement target of limiting the increase to “0.01 degrees Celsius per year.” This rate of temperature increase serves as a direct proxy indicator for the success of mitigation efforts.

3. Indicator for SDG 10 (Target 10.1)

   • Indicator: Disparity in economic losses between different country groups.
     • The article implies this indicator by comparing the projected economic losses of “hotter and low-income countries” (30-60% above average) to the “global average.” Measuring this gap would be a way to track the unequal impact of climate change.

Summary Table: SDGs, Targets, and Indicators

Source: tanahair.net