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Fighting climate change will help economic growth, finds study

Bloomberg Zurich | Updated on August 19, 2019 Published on August 19, 2019

The impact is universal, and affect all countries, rich or poor, and hot or cold, say researchers

Slowing the pace of climate change in line with the Paris Agreement has clear economic benefits, as global warming is increasingly seen as a risk to financial stability and the economy.

Abiding by the Paris Agreement and limiting annual average temperature increases to 0.01 degree Celsius and reduces global income by 1.07 per cent by 2100. That compares with a 7.22 per cent hit to Gross Domestic Product if the temperature rises by 0.04 degree Celsius a year, according to a National Bureau of Economic Research paper.

Bank of England Governor Mark Carney has been at the forefront of a push by central bank officials to build awareness about the potential losses for companies and economies as global temperatures rise, making storms more powerful and the weather less predictable. Officials are also calling for funding for green finance.

In a sign of what is at stake, a report by the Network for Greening the Financial System included a finding, attributed to Munich Re, showing that the annual costs for natural disasters topped the 30-year average of $140 billion in seven of the past 10 years — and that the number of extreme weather events since 1980 has tripled.

The authors, including Matthew Kahn of the University of Southern California and Jui-Chung Yang of National Tsing Hua University, used data from 174 countries for the period 1960 to 2014, and found that per capita output suffered by persistent changes in temperature.

“In contrast to most of the literature, we illustrated that these negative long-run growth effects are universal, that is they affect all countries, rich or poor, and hot or cold,” they wrote.

Published on August 19, 2019
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