G7 economies could shrink twice as much as they did during pandemic due to climate change: study

TORONTO -

The economies of G7 countries, including Canada, will shrink twice as much as they did during the COVID-19 pandemic if they don’t address climate change, according to a new study. 

The research, conducted by Oxfam and the Swiss Re Institute, showed that the world’s biggest industrial economies are projected to lose 8.5 per cent of GDP annually, or nearly $5 trillion, by 2050 if their leaders don’t enact a more ambitious plan to tackle climate change.

According to the findings, the economies of G7 nations – Canada, the U.K., the U.S., Japan, France, Germany, Italy – contracted by an average of 4.2 per cent during the pandemic, which resulted in staggering job losses and large stimulus packages.

In a press release, Oxfam said that economies are expected to bounce back from these short-term effects of the pandemic, while the impact from climate change will be seen every year.

Canada, along with the U.S. and the U.K., would lose around 6 to 7 per cent of GDP by 2050 if there is a 2 to 2.6C global temperature increase, and up to 9 per cent of GDP if the temperature rises 3.2C, and they don’t change their current climate policies, according to the study.

To make these projections, researchers at the Swiss Re Institute 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.

While all 48 countries examined in the research are expected to see a contraction in their economies, some will be hit far worse than others, Oxfam said.

For example, India is projected to lose 27 per cent from its economy and the Philippines is expected to lose even more at 35 per cent.

On the other hand, Canada, the U.S., and Germany are among the top 10 least vulnerable to climate change because they’re less exposed to the associated risks and have better resources to cope.

“They are all located at higher latitude, suggesting less stress on productivity from rising temperatures. They also have more robust mitigation infrastructure,” the study said.

For low-income countries, however, Oxfam researchers warned the consequences of climate change could be much greater, citing a recent study by the World Bank that suggested between 32 million and 132 million more people will face extreme poverty by 2030 because of climate change. 

“The climate crisis is already devastating lives in poorer countries but the world’s most developed economies are not immune,” Danny Sriskandarajah, CEO of Oxfam Great Britain, said in a press release on Monday.

Further, Sriskandarajah urged the U.K. government to take a leading role in developing a plan to reduce greenhouse gas emissions when the leaders of the G7 countries meet for a summit in Cambridge, U.K. at the end of the week. In addition to hosting the G7 Summit, the U.K. will hold UN climate talks, called COP26, in Glasgow in November.

“The UK Government has a once-in-a-generation opportunity to lead the world towards a safer, more liveable planet for all of us,” Sriskandarajah said.

“It should strain every diplomatic sinew to secure the strongest possible outcome at the G7 and COP26, and lead by example by turning promises into action.”

And while G7 governments have already unveiled new climate targets ahead of the COP26 summit, Oxfam said most fall short of what is required to limit global warming to below 1.5C.

“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,” the charitable organization said.