The world’s biggest economies could see an average loss of 11.5 per cent annually by 2050 – equivalent to $US9.4 trillion ― if G7 leaders do not take more ambitious action to tackle climate change.
It will be even worse for Australia which is projected to lose as much as 12.5 per cent each year by 2050.
Ahead of this week’s G7 meetings in the UK, Oxfam released its analysis of research undertaken by the Swiss Re Institute.
Oxfam found the loss in GDP for the G7 nations (not including guest nations like Australia) is double that of the coronavirus pandemic, which caused the economies of the same seven nations to shrink by an average of 4.2 per cent, resulting in staggering job losses and some of the largest economic stimulus packages ever seen.
But while economies are expected to bounce back from the short-term effects of the pandemic, the effects of climate change will be seen every year.
Oxfam said G7 leaders need to act by cutting carbon emissions more quickly and steeply.
Reinsurance company Swiss Re modelled how climate change is likely to affect economies through gradual, chronic climate risks such as heat stress, impacts on health, rising sea levels 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.
For example, by 2050, India is projected to lose 27 per cent from its economy.
South Africa and South Korea are projected to lose 17.8 and 9.7 per cent respectively while the Philippines is projected to lose 35 per cent from its economy.
Oxfam warned that for low-income countries, the consequences of climate change could be much greater. A recent study by the World Bank suggested between 32 million and 132 million additional people will be pushed into extreme poverty by 2030 as a result of climate change.
Oxfam Australia CEO, Lyn Morgain, said the economic case for climate action is clear.
“We need G7 and other wealthy countries like Australia to take dramatic action by 2030 to cut emissions and increase climate finance,” Morgain said.
“The economic turmoil projected in wealthy 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 and more liveable planet for all.”
While all G7 governments have unveiled new climate targets ahead of the UN COP26 climate summit hosted by the UK in November, Australia is yet to update or increase the ambition of its climate targets.
“We urge the Australian Government to step up its commitments ahead of the United Nations Climate Change Conference (COP26) later in the year to limit global warming below 1.5°C,” Morgain said.
“The G7 and other wealthy countries are some of the world’s largest historical emitters―with G7 nations responsible for a third of all CO2 emissions since 1990. They should be leading by example in this crucial year.”
Developed countries are also collectively failing to deliver on a longstanding pledge to provide $100 billion per year to help poor countries respond to climate change.