UK and US researchers have run the numbers on the huge costs of runaway climate change – and the myriad benefits of achieving net zero emissions
How much could climate change impacts cost the UK economy, and how much will it cost the UK to decarbonise and avoid the worst of these impacts?
Aside from the clear imperative moral underpinning climate action, these are the two key questions which guide almost all green policymaking in the UK, whether in government, finance, or business.
And today, UK and US researchers at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science (LSE), have sought to deliver some sobering, if not wholly surprising, answers to these critical questions.
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 equivalent to an increase in GDP of 9.1 per cent by the end of the century, they estimate.
The opposite scenario, meanwhile, is pretty stark. Already today, the UK is suffering costs equivalent to 1.1 per cent of its GDP from the impacts of climate change. But if emissions are allowed to continue rising and the planet is forced to steel itself for almost 4C of global warming by the end of the century, they conclude the UK faces a huge GDP hit of at least 3.3 per cent by 2050 rising to 7.4 per cent by 2100, thanks to both physical impacts and the global socio-economic disruption wrought by rolling climate crises.
In short, they conclude the UK economy would be far bigger and more prosperous under a global net zero scenario, than under a world contending with runaway climate change.
“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,” said Dr James Rising, who led the analysis at the University of Delaware.
The UK and US research team behind the report analyzed a range of previous studies to come up with their estimates, taking into consideration nine physical climate impact areas, including agriculture, livestock and fisheries, drought, flooding, and catastrophic damage.
Should the entire world achieve net zero by 2075, it would cap global warming to around 2.1C by the end of the century, when the cost to the UK economy from resulting climate impacts would amount to around 2.4 per cent of national GDP, the researchers calculated. That is an economic hit which would be five percentage points lower than under a 4C scenario by the end of the century.
Such findings underscore the very global nature of the climate crisis, and how the UK economy stands to suffer significantly unless all countries decarbonise their harvest over the coming decades.
But the report also highlights the myriad added benefits – such as better health and air quality – that would result from the UK delivering on its statutory target to achieve net zero emissions by 2050, which it estimated could amount to a 3.3 per cent GDP boost, on top of the avoided costs of physical climate impacts. Moreover, the researchers estimate a further 2.8 per cent GDP boost is on offer to the UK as a result of stimulating investment in green industries and infrastructure.
Overall, it amounts to a 6.1 per cent UK GDP boost by the end of the century from delivering net zero, compared to a 7.4 per cent hit from runway climate change, according to the report.
The ‘costs’ of building a net zero economy in the UK have come into sharp focus in recent months, as a small group of MPs and media commentators have argued the country cannot afford to accelerate its decarbonisation efforts, despite the reems of evidence pointing to the economic necessity of combatting climate change.
Today’s research adds to that growing body of evidence. While it estimates the price for fast action to drive down greenhouse gas emissions in the UK at around two per cent of GDP per year, it emphasizes that this would still also unlock a 4.1 per cent GDP boost.
“We estimate that the mitigation costs involved in the UK’s pathway to net zero by 2050 are unlikely to exceed the equivalent of two per cent of GDP over the transition period,” Rising said. “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.”
Add into the mix the rest of the world achieving net zero by 2075 at the latest, meanwhile, and that GDP boost for the UK could rise to 9.1 per cent, thanks to more avoided economic damages from climate-disrupted trade and supply chains, for example.
“Pursuing net zero is therefore a ‘no regret’ policy, as it provides benefits to the UK economy even if global emissions do not fall enough to avoid the worst damages from climate change,” the research states.
Even so, while such calculations emphasize the huge benefits from net zero, and broad costs from runway climate change, they risk overshadowing the very real dangers posed by rising temperatures and volatile weather patterns even under far more modest levels of warming than the worst case scenarios that provided the report with some of its headline figures.
For example, the weaking of the Gulf Stream in the North Atlantic risks resulting in the UK agriculture sector, potentially in a 0.25 per cent loss in GDP under current policies. For context, the entire UK agriculture sector currently accounts for 0.6 per cent of GDP. But the report also stresses that these agriculture losses could be paired back to 0.02 per cent of GDP by delivering on the Paris Agreement targets and minimising the climate impacts the industry faces.
Elsewhere, the research also digs into the stark health impacts of rising temperatures in the UK. It warns that while northern regions are likely to experience milder winters, rising heat in the summer could increase the death rate by 7.1 deaths per 100,000 people by the end of the century, under current policies, which would also decrease UK GDP by 0.4 per cent .
In contrast, action to rapidly reduce emissions towards net zero by 2050 could limit the number of heat-related deaths in the UK to 0.9 per 100,000 people, it calculates.
The research is far from the first cost-benefit analysis of climate change impacts and decarbonisation. Only last week, consulting giant Deloitte published its own assessment, concluding that unchecked climate change could cost the global economy $178tr over the next 50 years, leading to 7.6 per cent cut in GDP in 2070. The UK alone, it estimated, would suffer a £220bn economic hit under such a scenario. Again, the report predicted that achieving net zero would deliver net economic gains.
While putting a precise price tag on the hugely complex, interlinked risks posed by myriad climate scenarios that range from the catastrophic to the hopefully-manageable are extraordinarily difficult, almost all studies deliver ostensibly the same conclusion: ever higher temperatures are extremely costly and dangerous, And in contrast net zero is not just a bargain, it delivers a healthier and more prosperous economy for all.