The economies of the G7 nations could lose an average of 8.5% per year by 2050, equivalent to $4.8tn (£3.4tn), if leaders do not take more ambitious action to tackle climate change, a research group has warned.
According to Oxfam’s analysis of research by the Swiss Re Institute, human and economic impact on low-income nations will be much worse.
Oxfam warned on Monday that the loss in GDP is double that of the COVID-19 pandemic, which already caused G7 economies to shrink by an average of 4.2%.
The worst affected country in the G7 would be Italy, which stands to lose 11.4%. The US would be hit with a 7.2% loss by 2050, with Japan set to lose 9.1%, Germany 8.3%, France 10%, and Canada 6.9%.
The UK economy would lose 6.5% a year by 2050 on current policies and projections, compared with 2.4% if the goals of the Paris climate agreement are met.
Although economies are expected to recover from the short-term effects of the current health crisis, the effects of climate change will be seen every year, the research said.
Oxfam is calling on G7 leaders, who are meeting in the UK later this week, to reduce carbon emissions more quickly and steeply.
Read more: G7 Summit in Cornwall to be carbon neutral
Danny Sriskandarajah, Oxfam GB chief executive, called on the UK to “strain every diplomatic sinew” to drive more climate ambition from fellow G7 nations at the upcoming G7 summit.
“The UK government has a once-in-a-generation opportunity to lead the world towards a safer, more liveable planet for all of us,” he said.
Swiss Re 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. All of the 48 nations in the study are expected to see an economic contraction, with many countries predicted to be hit far worse than the G7.
The data showed that by 2050, India, which was invited to the G7 summit, is projected to lose 27% from its economy, while Australia, South Africa and South Korea are projected to lose 12.5%, 17.8%, and 9.7% respectively.
The Philippines is projected to lose 35% and Colombia is projected to lose 16.7%.
It follows a recent study by the World Bank that suggested between 32 million and 132 million additional people will be pushed into extreme poverty by 2030 as a result of climate change.
Watch: UK finance sector responsible for almost double Britain's net total emissions
Oxfam added that G7 governments are also collectively failing to deliver on a pledge to provide $100bn per year to help poor countries respond to climate change.
Only two G7 countries have said they will increase climate finance from current levels. France decided to maintain its current level of climate finance while Canada, Germany, Japan and Italy have yet to state their intentions, the charity said,
Oxfam estimates their current commitments amount to $36bn in public climate finance by 2025, with only a quarter ($8-10 billion) of that for adaptation.
“The economic case for climate action is clear ―now we need G7 governments to take dramatic action in the next nine years to cut emissions and increase climate finance,” Max Lawson, head of inequality policy at Oxfam, said.
“The economic turmoil projected in wealthy G7 countries is only the tip of the iceberg: many poorer parts of the world will see increasing deaths, hunger and poverty as a result of extreme weather. This year could be a turning point if governments grasp the challenge to create a safer more liveable planet for all.”
All G7 governments have unveiled new climate targets ahead of the UN COP26 climate summit in November, with most falling short of what is needed to limit global warming below 1.5°C. The projections used in this press release assume high stress factors and global warming of 2.6°C by mid-century, which is a level of warming that could be reached based on current policies and climate pledges from all countries.
The conference, which is being held between 1 and 12 November, will be the largest summit the UK has ever hosted. It will have dozens of world leaders in attendance and bring together representatives from nearly 200 countries, including experts and campaigners.
It was originally scheduled for November 2020 but was delayed by a year due to the coronavirus pandemic. It has been described as the most significant climate event since the global Paris Agreement was secured in 2015.
Jerome Haegeli, group chief economist at Swiss Re, said: “Climate change is the long-term number one risk to the global economy, and staying where we are is not an option – we need more progress by the G7. That means not just obligations on cutting CO2 but helping developing countries too, that’s super-important.”
He also added that vaccines for COVID-19 were also a key way to help developing countries.
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