Climate Change GDP Risk: The 2024 Projections Explained

Short answer: the 2024 GDP risk in four facts

• Recent research finds large effects. An NBER working paper estimates that each 1°C of global warming can cut world GDP by over 20% in the long run. A summary from the World Economic Forum reports a rule of thumb: about 12% GDP loss per 1°C.
• On our current path, warming near 3°C could make people 30–50% poorer by 2100 compared with a world without warming, according to the same NBER analysis and WEF summary.
• If the world keeps warming below 2°C, damages likely stabilize later this century. As Yale Climate Connections notes, once we reach net zero, the growth drag may fade within about a decade.
• Hotter, poorer countries face bigger hits to growth and development, per the IMF and Carnegie Endowment.

Get the data: Use the comparison table below to brief teams and stakeholders fast.

What is the economic impact of climate change?

Climate change harms the economy by cutting output, raising costs, and slowing growth. Bad heat, floods, storms, and sea level rise damage farms, roads, homes, and health.

This risk shows up in GDP. It also shows up in prices, jobs, and trade. In short: climate change and the economy are tightly linked.

• Near term, disasters already cost hundreds of billions. North America saw about $415 billion in climate disaster losses over three years, per Columbia Climate.
• Long term, the WEF highlights new results: roughly 12% lower world GDP for every 1°C of warming, with possible declines over 50% by 2100 under high warming.
• Meeting the Paris Agreement matters. Keeping warming under 2°C can steady damages in the second half of the century, notes Yale Climate Connections.

Near-term impacts (2020s–2030s)

• More heat and storms push up insurance costs and strain budgets.
• Farm yields swing more. Workers lose hours to extreme heat.
• Supply chains face more delays and damage.

Late-century risks (2050–2100)

• Under ~3°C of warming, multiple studies point to very large losses: 30–50% lower GDP vs. a no-warming world, per NBER and the WEF.
• Under <2°C, damages are smaller and may stabilize after net zero is reached, per Yale Climate Connections.

Why do GDP projections vary so much?

Studies do not agree because they measure different things in different ways. Here are the big differences to watch:

• Global vs. local temperature: New methods using global temperature find larger damages because global heat tracks extremes better than country averages, says the NBER paper.
• Growth vs. level effects: A meta-analysis shows some models treat damages as a one-time hit (level), while others show a persistent drag on growth. Persistent drag creates much bigger losses by 2100.
• What impacts are counted: Heat on labor, farm yields, storms, sea level, health, and finance are often included. But compounding shocks can be hard to capture.
• How long damages last: If damages fade after net zero, losses stabilize; if they persist, losses keep growing. Yale Climate Connections explains why this matters for the bottom line.
• Assumptions and discounting: Choices about adaptation, tech change, and discount rates shift results.

Key terms, plain and simple

• Damage function: A math rule that links warming to economic loss. New evidence in the NBER study suggests the curve may be steeper than older models assumed.
• Social cost of carbon: The dollar value of harm from one extra ton of CO₂. Meta-studies like this analysis inform that number.
• Decoupling: Growing the economy while cutting emissions. See the debate at LSE and Bruegel on whether green growth can scale fast enough vs. calls for degrowth.

Depth module: study comparison (2024 snapshot)

Study	Headline finding	Scenario	Takeaway
NBER (Bilal & Känzig, 2024)	1°C warming reduces world GDP by >20% in the long run; losses can exceed 50% by 2100 under high warming	Global temperature-based estimates	Global heat and extremes drive bigger macro losses than older local models
WEF summary (2024)	About 12% GDP loss per 1°C; possible >50% by 2100 at ~3°C	Rule of thumb from new macro evidence	Simple metric for planning and risk screening
Yale Climate Connections (2024)	Damages may stabilize after net zero if growth effects fade	<2°C Paris pathway	Hitting Paris targets protects long-run growth
Meta-analysis (2023)	Growth responds to temperature change; effect size varies across methods	Multiple models	Method choice drives results; change vs. level matters
IMF (2019)	Hotter countries see larger, lasting hits to productivity and growth	Cross-country evidence	Uneven impacts raise equity and development concerns
NGFS scenario coverage (2024)	Updated risk case shows GDP growth down ~30%; some argue this is conservative	Regulator scenarios	Markets may underprice systemic risk

What the 2024 projections mean for decisions now

Here is the practical takeaway: the economic impact of climate change is big enough to shape budgets, portfolios, and policy today. Clear steps help reduce risk.

For policymakers

• Move faster on clean energy and efficiency. The growth case strengthens as damages rise; see the green growth debate at Bruegel and LSE.
• Price carbon and invest in resilient infrastructure. Stable rules guide private capital.
• Target heat risk: protect workers, crops, and grids in hot regions first.

For businesses and investors

• Put climate into the cost of capital and project hurdle rates. Use the 12% per 1°C heuristic from the WEF summary to frame downside checks.
• Stress-test supply chains for heat, flood, and storm risk. Diversify locations and transport modes.
• Cut emissions with proven moves (renewables, efficiency) to lower risk exposure and operating costs; see sector work at EPIC.

How to read a GDP risk number (and not misread it)

• Baseline matters: Losses are vs. a world without warming, not vs. today’s GDP.
• Global vs. local: Global numbers hide big regional gaps. Hotter regions lose more.
• Time horizon: Long-run effects snowball. A small annual drag can make a big end-of-century gap.
• Adaptation helps but does not erase risk: Better cooling, seeds, and seawalls reduce losses, but extremes can still strain systems.
• Uncertainty cuts both ways: Ranges include upside from innovation and downside from compounding shocks.

FAQs

Can the world grow and cut emissions at the same time?

Yes, some places already have. But scaling it worldwide needs faster clean power, efficiency, and smart policy. See LSE and Bruegel on green growth vs. degrowth.

Does reaching net zero end the growth drag right away?

Not instantly, but the drag can fade within about a decade, according to the work summarized by Yale Climate Connections.

Why do some studies show much smaller losses?

They may use local temperatures, assume only one-time level hits, or include fewer kinds of damages. A meta-analysis explains these method gaps.

Method notes and limits

• Estimates reflect the best data we have. New data on extremes can change results.
• Compounding risks (heat + drought + fire) are hard to model together.
• Financial spillovers, migration, and conflict risks may be undercounted.
• If warming overshoots 2°C and then falls, damages may persist for some time.

Bottom line

The economic impact of climate change is large, uneven, and, in high-warming paths, likely to slow global growth. Staying under 2°C limits long-run harm. For leaders, this is not only an environmental issue. It is core economic strategy: cut emissions fast, build resilience now, and plan with clear risk numbers.