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Lost & Damaged: A study of the economic impact of climate change on vulnerable countries (November 2021)

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Climate change could cause 64% GDP hit to world’s vulnerable countries

  • Monday is Adaptation, Loss and Damage Day at COP26

  • Report projects economic harm caused by climate change on countries in LDCs, AOSIS and CVF.

  • Average GDP hit of -19.6% by 2050 and -63.9% by 2100 under current climate policies.

  • Even if world limits heating to 1.5C countries face average GDP damage of -13.1% in 2050 and -33.1% in 2100.

  • Pressure building for COP26 to deliver significant outcome on loss and damage.

A study commissioned by Christian Aid highlights the devastating economic impact climate change will inflict on the world’s most vulnerable countries.

As delegates at COP26 in Glasgow mark ‘loss and damage day’, the new report lays out the grim economic future some of the poorest countries will face, underlining the need for a robust system for dealing with loss and damage and much greater action to reduce emissions.

The report, Lost and Damaged: A study of the economic impact of climate change on vulnerable countries, was coordinated by Marina Andrijevic, an economist at Humboldt University in Berlin. By 2050 and 2100 the economies of these countries are still expected to be higher than they are today. This study highlights the amount of damage caused to their GDP by climate change, compared to a scenario where climate change didn’t take place.

Estimates based on peer-reviewed methodology by Burke et al show that based on current climate policies, where global temperature rise reaches 2.9C by the end of the century, the world’s most vulnerable countries can expect to suffer an average GDP hit of -19.6% by 2050 and of -63.9% by 2100. Even if countries keep global temperature rise to 1.5C as set out in the Paris Agreement, vulnerable countries face an average GDP reduction of -13.1% by 2050 and -33.1% by 2100. This underlines the fact that a robust loss and damage mechanism will be needed, even if countries succeed in keeping global heating to under 1.5C.

The country facing the worst projected GDP hit is Sudan, which in September was left reeling from heavy rains and flash floods affecting more than 300,000 people. Our study shows that under current climate policies Sudan faces a GDP reduction of -32.4% by 2050 and -83.9% by 2100 compared to if there was no climate change. Even in a 1.5C scenario, Sudan can expect a GDP blow of -22.4% by 2050 and -51.4% by 2100.

The study estimates the economic damage caused by climate change on GDP for countries that make up two key negotiating blocs at the UNFCCC, the Least Developed Countries (LDCs) and Alliance of Small Island States (AOSIS), and those that are members of the Climate Vulnerable Forum (CVF).

The report shows the danger is particularly acute in Africa, with eight of the top 10 worst affected countries coming from that continent. All 10 face GDP damage of over -70% by 2100 under our current climate policy trajectory and a -40% hit even if the world keeps to 1.5ºC. A previous study by Diffenbaugh and Burke, using the same methodology as this paper, showed that GDP per capita is already -13.6% lower across Africa than it would have been without global heating between 1991-2010.

The methodology used here doesn’t factor in adaptation measures so greater investment in adaptation could potentially alleviate some of the damage. The paltry amounts that western governments are committing to adaptation support for the poorest is one of the outstanding issues under discussion at COP26. The countries most affected are also the ones with very low capacities to adapt, as outlined the ND GAIN index of vulnerability and adaptative capacity so it is unreasonable to expect that they will be able to reduce these damages very substantially.

Marina Andrijevic, from Humboldt University, who coordinated the study, said the findings only looked at the impact of temperature rise meaning the added damage from extreme weather events could actually make the economic outlook for these countries even worse. She said: “Based on historical relationships between GDP growth and climate variables, here we extrapolate how a future under climate change might affect economic performance. We get staggering numbers which imply that the ability of countries in the Global South to sustainably develop is seriously jeopardised and that policy choices that we make right now are crucial for preventing further damage. It’s important to keep in mind that these numbers are just extrapolations, and focus on the impact of rising temperatures, not the effects of extreme weather events. It’s possible that these numbers are conservative estimates if extreme weather events continue to cause substantial economic harm themselves in the coming decades.”

Nushrat Chowdhury, Christian Aid’s Climate Justice Advisor from Bangladesh, said: “Being from Bangladesh I’ve seen how loss and damage is already affecting my people. Houses, lands, schools, hospitals, roads are being lost and damaged by floods and cyclones. People are losing everything. Sea levels are rising, and people are desperate to adapt to the changing situations. This report shows that even if we keep temperature rise to 1.5C Bangladesh will suffer a GDP impact of more than 38% by 2100. If ever there was a demonstration of the need for a concrete loss and damage mechanism this is it.”

Dr Friederike Otto, Senior Lecturer in Climate Science at Imperial College London, said: “Heatwaves everywhere in the world are getting hotter and more frequent because of climate change and will continue to worsen as long as emissions continue. Not only is extreme heat deadly, it also can make it impossible to work outdoors - so tropical and equatorial countries will suffer increasing economic damage if the big polluters don't take action to reduce emissions. In addition heatwaves in Africa are often under-reported and there is a lack of early-warning systems and other measures to help people cope.”

Mohamed Adow, Director of Nairobi-based climate and energy think tank, Power Shift Africa, said: “This report shows the scale of the economic disaster facing Africa due to climate change. The fact that eight of the 10 most impacted countries are from my continent underlines the threat that we face if we don’t tackle global emissions urgently, but also shows the glaring need for a concrete loss and damage mechanism to deal with this economic fallout. Africa has the done the least to cause climate change yet this report shows it will face the most severe consequences. That is deeply unjust. The fact rich countries have consistently blocked efforts to set up a loss and damage fund to deal with this injustice is shameful. That attitude needs to change here in Glasgow. Not only because it is needed, but the bill will only get bigger if rich countries continue to ignore the needs of the most vulnerable.”

Prof Saleemul Huq, Director of the International Centre for Climate Change and Development in Bangladesh, said: “COP26 is the first COP in the new era of loss and damage from Human induced climate change which is going to get worse everyday and every year everywhere going forward. The worst impacts in the longer term can be reduced by rapid Mitigation efforts while in the short to medium term they are now unavoidable.”