The Grantham Research Institute on climate change recently released a report titled “What will climate change cost the UK? Risks, impacts and mitigation for the net-zero transition” which says that current warming trajectories look set to overshoot the Paris Agreement and deliver a seismic shock to global GDP levels.
The research finds that the climate crisis will deliver “catastrophic disruption to the global economic system” through issues such as agriculture, livestock and fisheries shortages, drought, flooding and coastal damage.
For the UK, these global impacts could deliver a 7.4% reduction to the economy by the end of the century.
The report and accompanying policy brief provide improved estimates of the likely economic damages from climate change to the UK, highlighting where the greatest risks and need for adaptation are. These are translated into loss of socioeconomic welfare and reported as an equivalent loss of the UK’s GDP under two different policy scenarios – one in which current policies continue and another in which strong mitigation policies are put in place. This enables a comparison between the costs of climate change impacts and the cost of mitigation efforts until the end of this century.
The report estimates the total combined climate change risk for the UK based on an analysis of nine key ‘impact channels’, ranging from agriculture, livestock and fisheries to drought, flooding and coastal impacts.
Dr James Rising, who led the analysis at the University of Delaware, said: “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”.
“We estimate that the mitigation costs involved in the UK’s pathway to net-zero by 2050 are unlikely to exceed the equivalent of 2% of GDP over the transition period. 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% in GDP by the end of this century.”
The research notes that current climate policies look set to deliver a global temperature that is 3.9 Celsius degrees higher than its pre-industrial level by 2100. The impact this could have on the UK’s GDP rises 3.3% by 2050 and 7.4% by 2100.
However, the research notes that reaching net-zero globally by 2075 would limit warming to 2.1C, an impact that would limit the UK’s GDP shrink to 2.4% – a 5% difference.
Reaching net-zero would also provide additional benefits to the UK, including a 2.8% economic boon through green technologies, industries and infrastructure. In a scenario where the UK reaches net-zero by 2050 and then the rest of the world by 2075, there would be a net economic benefit to the UK economy of 9.1%.
Researchers also found that reaching net-zero would reduce the rate of heat-related deaths to 0.9 per 100,000 people, compared to 7.1 deaths per 100,000 under current climate policies.
They also found the greatest single risk of climate change damages to the UK economy is from catastrophic disruption to the global economic system (worth 4.1% of GDP) and that foreign trade will, under current policies, cause a 1.1% fall in UK GDP as other countries experience losses from climate change.
Agriculture is one of the UK sectors expected to be most impacted by climate change. The reduction of arable land as regions become drier is projected to halve its total contribution to UK GDP by 2100.
It found that in the future, natural disasters, tourism, forestry, transport, conflict and displacement are likely to emerge as significant channels of climate risk. Also, proactive investment in adaptation measures such as coastal protection can greatly reduce the risk of climate-related damages.
It is not drawing too much of a longbow to suggest that UK’s predicament will play out in a variety of forms on the world stage with one underlying message: it is cheaper to prevent than to try to repair.
In the meantime, Lloyds Bank Business has released the findings of YouGov survey of more than 1,000 UK SMEs at the start of the year. Business leaders and decision makers were questioned on approaches to carbon reduction and net-zero.
The survey found that around 50% of respondents did not know what was meant by the term “net-zero”, and that 77% were unsure or did not have strategies in place to reduce carbon emissions over the next three years.
Just 12% of respondents had calculated their carbon footprint and many noted the key barriers that were hindering better understanding and action on the subject. More than one-third cited a lack of knowledge, while finance and time were cited by 25% of respondents respectively.
With more than 5.5 million SMEs operating in the UK, the research suggests that more than 4 million businesses nationwide may not have ambitious carbon targets in place.
Lloyds Bank’s commercial director of business banking Adam Rainey said: “While our nation’s small businesses recognise the importance of tackling climate change, there are real issues with understanding how to get there – including calculating carbon emissions and even the meaning of net-zero.