Climate change will have an impact on economic growth over the next decade — and not for the better. North America is no exception, but it is better off than the rest of the world.
By 2050, climate change will shrink the US economy by 1.1%, according to a report from the Economist Intelligence Unit. The same holds true for North America’s economy as a whole, according to the report. Natural catastrophes, such as wildfires and droughts, for example, will continue to be a drag on the economy with worsening climate conditions.
Still, the United States is comparably well off. Western Europe’s GDP growth stands to drop 1.7% over the next 30 years, putting it in second place behind North America.
Preparation for climate change is higher in these regions, which is making them more resilient. Wealthier and more developed economies have it easier when it comes to battling the onslaught of climate challenges. But being rich is only part of the deal. The quality of government institutions also matters.
Institutions must be able to adapt to change and put effective mitigation policies in place to remain intact in the face of climate challenges. But being rich is only part of the deal The quality of government institutions also matters.
“Poor institutions, therefore, can simultaneously harm economic growth and exacerbate the negative impacts of climate change,” the report said. This might include investing in flood defense, water storage or public infrastructure.
Global GDP growth will be 3% lower by 2050 thanks to the impact of climate change, and that means the developing world will bear the brunt of the bad news.
Africa is the most vulnerable to negative economic impact, according to the EIU report. The continent’s economy stands to shrink by 4.7% over the next 30 years. It is already at a disadvantage because average temperatures are higher and economic development is lower compared to the United States, for example.
Latin America and the Middle East are rounding out as the top three of the least resilient regions. Asia-Pacific falls in the middle, with an expected hit of 2.6% to its economy thanks to climate change.
“Countries, both developed and developing, will need to make a greater effort on the domestic front to meet their goals on adaptation and mitigation for the economic impacts to be reduced,” said EIU Country Analysis Director John Ferguson.