U.S. gross domestic product (GDP) will be 1 percent smaller than it would have been otherwise in 2050 because of climate change, according to a new projection from the nonpartisan Congressional Budget Office (CBO).
CBO predicted that between 2020 and 2050, climate change will, on average, reduce GDP growth by 0.03 percentage points each year, culminating in the ultimate 1 percent decrease as of 2050.
The projection was calculated using data from 1995 to 2019. Researchers used both the overall historical trends between the changing climate and GDP output and also how specific events like high temperatures and hurricanes might cause specific results like property damage.
GDP is a calculation of all goods and services produced in a country and is used as a measure of economic activity.
The CBO says that its finding averages several climate scenarios to make its determination. There have been other studies saying that climate change's impact could be greater than 1 percent over the same period, with a study from last year saying that climate change could shrink GDP by nearly 4 percent by 2050.
A study last year found that the U.S. could see a GDP decrease of up to 10.5 percent by 2100, and earlier this month, a report from a Wall Street regulator said that climate change was likely to cause economic instability.
Kate Ricke, a professor of climate, atmospheric science and physical oceanography at the University of California San Diego said that while it was likely to leave out factors that both increase and decrease GDP, she believes the CBO findings are likely an underestimate.
“My judgment is that on average it’s probably an underestimate, but there are effects that go both ways,” she said, adding that the findings leaves out things like the cost of short-term adaptation, biodiversity loss, ocean acidification, long-term adaptation and impacts on other parts of the economy like trade.
Ricke also said that the projection was limited because it can’t calculate how the impacts of climate change will change after 2019.
“The real power of studies that employ this methodology is that it’s empirically based, so it’s tied to real-world evidence. These relationships are calibrated based on data for how GDP has changed in the past in response to variation year-to-year in temperature...but the problem is that basically any source of large changes to large-scale conditions that aren’t reflected in...the past, the model can’t capture,” she said.
Ricke gave the example of this year’s wildfires in the west.
“If we don’t have instances of these massive fires in the past when there was a warm year, and the economic effects of that reflected in the data was used to calibrate the model, damages from things like that won’t be reflected in the projections.”
The CBO’s working paper acknowledged that its conclusion isn't absolutely certain, especially given potential changes in how climate affects economic growth and uncertainties about how much damage from climate-related events may persist.
This year is the first time that the office has put forth a separate analysis on climate impacts to GDP, as opposed to simply incorporating climate into other projections.
--Updated on Sept. 23 at 3:21 p.m.