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Extreme heat will cost developing nations GDP declines of up to 64%: Study

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GLASGOW – The world’s most vulnerable countries will bear the brunt of climate change, with these economies projected to suffer gross domestic product (GDP) declines of up to 64 per cent by 2100, a new study has found.

The study, commissioned by non-government organisation Action Aid and published on Monday (Nov 8), found that if global temperature rise reaches 2.9 deg C by the end of the century, the most vulnerable countries can expect to suffer an average GDP hit of 19.6 per cent by 2050 and 63.9 per cent by 2100.

The study, coordinated by Humboldt University economist Marina Andrijevic, looked at the climate-driven GDP hits for countries that are disproportionately affected by climate impacts.

These include Sudan, Bangladesh, and small, low-lying island nations across the globe, including the Maldives, Seychelles, Tuvalu and Timor Leste.

Based on climate pledges made by some 192 countries in October, the world is on track to experiencing a temperature rise of 2.7 deg C above pre-industrial levels by century-end, an earlier analysis by the United Nations (UN) showed.

Updates to the pledges made in the lead-up to and during the ongoing UN climate conference COP26 in Glasgow could improve the situation if these targets are met. Melbourne-based research start-up Climate Resource said last Wednesday (Nov 3) that the world stands a good chance of limiting warming to 1.9 deg C.

Climate scientists have shown that global heating needs to be kept to within 1.5 deg C above pre-industrial levels to ward off harsher climate impacts.

Still, the latest Action Aid study showed that even if climate pledges are updated to limit the warming to this threshold, the economic losses could be 13.1 per cent by 2050 and 33.1 per cent by 2100.

“(The findings) underlines the fact that a robust loss and damage mechanism will be needed, even if countries succeed in keeping global heating to under 1.5 deg C,” said Action Aid in a statement.

Loss and damage

Loss and damage is a term used in the context of the ongoing climate negotiations, and refers to climate impacts that societies are currently suffering that cannot be, or have not been, reduced by adaptation efforts.

This includes the irretrievable loss and damage caused by climate impacts, such as loss of life and damage to infrastructure, which can be wrought by extreme weather events such as hurricanes as well as sea-level rise.

Earlier estimates for the economic costs of loss and damage in developing countries alone have been projected to be between US$290 billion (S$391 billion) and US$580 billion by 2030.

Some forms of loss and damage are also intangible, and can include the loss of biodiversity, cultural monuments and traditions, and sacred sites.

In August, the UN’s Intergovernmental Panel on Climate Change said that climate change is widespread, rapid and intensifying with some impacts, such as sea-level rise, now irreversible over hundreds to thousands of years.

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And if action is not taken to reduce the warming, the situation could get worse, with heat waves alone having severe repercussions on economies.

Dr Friederike Otto, a senior lecturer in climate science at Imperial College London, said of the latest Action Aid report: “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.”

Extreme heat is deadly and can make it impossible to work outdoors, Dr Otto said.

“Tropical and equatorial countries will suffer increasing economic damage if the big polluters don’t take action to reduce emissions,” she added.

Heatwaves in Africa are often under-reported and there is a lack of early-warning systems and other measures to help people cope, Dr Otto said.

The Action Aid study showed that Africa is among the regions that will be most affected in a warming world, with Sudan facing the worst projected GDP hit. In September, the African nation 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 per cent by 2050 and 83.9 per cent by 2100 compared to if there was no climate change,” said Action Aid.

“Even in a 1.5 deg C scenario, Sudan can expect a GDP blow of 22.4 per cent by 2050 and 51.4 per cent by 2100,” the group added in a statement.

But this issue of loss and damage is emerging as a major sticking point at COP26.

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Poorer nations are seeking additional finance to cope with the rising and repeated costs of climate change, as the repeated losses and damage threaten livelihoods and economic development.

But there remains knowledge gaps on the scale of loss and damage, as well as the financing and technical assistance needed. Industrialised nations are also wary of liability risks and compensation claims.

Help to adapt

Action Aid said the methodology used in the latest study does not factor in adaptation measures and so greater investment in this area could potentially reduce some of the damage.

Adaptation strategies refer to efforts to reduce the impacts of climate change on human communities.

They include coastal protection measures that can prevent flooding from sea-level rise, indoor farms to protect crops from changing weather patterns, or drainage systems that can deal with intense deluges brought about by more erratic rainfall patterns.

But financing of adaption measures is another major sticking point at COP26.

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Poorer nations want wealthier ones to make good on a pledge they made over a decade ago to channel US$100 billion (S$135 billion) in annual climate finance by 2020 to green the economies of the poorer countries and help them adapt to climate impacts. But in 2019, climate finance flowing to developing countries reached only US$ 79.6 billion.

The US$100 billion pledged for adaptation measures is separate from the additional financing that developing nations are calling for to deal with loss and damage from climate change.

Humboldt University’s Dr Andrijevic said the findings of the study only looked at the impact of temperature rise on economies – meaning the added damage from extreme weather events could actually worsen the economic outlook.

“Based on historical relationships between GDP growth and climate variables, we extrapolate how a future under climate change might affect economic performance,” she said.

“We get staggering numbers which imply that the ability of (developing countries) to sustainably develop is seriously jeopardised and that policy choices that we make right now are crucial for preventing further damage.”

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