G7 Economies Could Lose 8.5% Per Year by 2050 Without More Ambitious Climate Action

The economies of the G7 nations could see an average loss of 8.5 percent annually by 2050―equivalent to $4.8 trillion―if leaders do not take more ambitious action to tackle climate change, according to Oxfam’s analysis of research by the Swiss Re Institute. Oxfam is calling on G7 leaders, who are meeting in the UK later this week, to cut carbon emissions more quickly and steeply.

Oxfam found this loss in GDP is double that of the coronavirus pandemic, which caused the economies of the same seven nations to shrink by an average of 4.2 percent, resulting in staggering job losses and some of the largest economic stimulus packages ever seen. But while economies are expected to bounce back from the short-term effects of the pandemic, the effects of climate change will be seen every year.

Swiss Re modelled how climate change is likely to affect economies through gradual, chronic climate risks such as heat stress, impacts on health, sea level rise and agricultural productivity. All of the 48 nations in the study are expected to see an economic contraction, with many countries predicted to be hit far worse than the G7. For example, by 2050:

• India, which was invited to the G7 summit, is projected to lose 27 percent from its economy.
   
• Australia, South Africa and South Korea, also invited, are projected to lose 12.5, 17.8 and 9.7 percent respectively.
   
• The Philippines is projected to lose 35 percent.
   
• Colombia is projected to lose 16.7 percent 

Oxfam warned that for low-income countries, the consequences of climate change could be much greater. A recent study by the World Bank suggested between 32 million and 132 million additional people will be pushed into extreme poverty by 2030 as a result of climate change. 

Max Lawson, Head of Inequality Policy at Oxfam, said: “The economic case for climate action is clear―now we need G7 governments to take dramatic action in the next nine years to cut emissions and increase climate finance. 

“The economic turmoil projected in wealthy G7 countries is only the tip of the iceberg: many poorer parts of the world will see increasing deaths, hunger and poverty as a result of extreme weather. This year could be a turning point if governments grasp the challenge to create a safer more liveable planet for all.”

All G7 governments have unveiled new climate targets ahead of the UN COP26 climate summit hosted by the UK in November, with most falling short of what is needed to limit global warming below 1.5°C. As some of the world’s largest historical emitters―responsible for a third of all CO2 emissions since 1990―they should be leading by example in this crucial year. 

G7 governments are also collectively failing to deliver on a longstanding pledge by developed countries to provide $100 billion per year to help poor countries respond to climate change. Only two G7 countries have said they will increase climate finance from current levels. France decided to maintain its current level of climate finance while Canada, Germany, Japan and Italy have yet to state their intentions. Oxfam estimates their current commitments amount to $36 billion in public climate finance by 2025, with only a quarter ($8-10 billion) of that for adaptation.

Oxfam is calling on G7 governments to immediately raise their targets for cutting emissions over the next nine years to reach their fair share of the reductions needed to keep global warming below 1.5°C. Recently announced commitments are welcome but do not go far enough. They should also dramatically increase their pledges of climate finance over the next four years and ensure that at least half of this funding is for adaptation.