Climate change is no longer a distant threat—it is reshaping our economies, communities, and future. This assessment details the staggering costs, urgent timelines, and practical pathways for action.

Executive Summary: Magnitude and Urgency

By 2100, a 3°C warming scenario could drive global economic damages down by 15–34%. Without rapid action, annual losses may reach $38 trillion by mid-century, cutting per capita incomes nearly 19%. In contrast, mitigation and adaptation investments totalling just 1–2% of global output could avoid up to six times these losses.

These figures underscore two imperatives: first, we face immense locked-in damages from past emissions; second, investments today yield returns of five to tenfold by century’s end. Decision-makers must front-load spending on resilience and decarbonization to avert the most catastrophic economic fallout.

Key Quantitative Estimates

Our analysis relies on peer-reviewed studies, synthesizing projections across warming scenarios, sectoral impacts, and regional disparities.

This table highlights the high stakes: delaying action magnifies losses, while proactive measures remain cost-effective and socially beneficial.

Drivers of Economic Loss

Multiple channels compound to erode global prosperity. Productivity declines from heat stress and health burdens significantly outweigh direct infrastructure damage.

• Extreme weather events: storms, floods, droughts disrupting supply chains and assets.
• Labor impacts: reduced working hours and skill degradation under heat stress.
• Non-market effects: health care costs, food insecurity, migration pressures.
• Systemic shocks: ecosystem degradation, conflict risk, cascading economic failures.

These drivers interact, creating feedback loops that amplify vulnerability, especially in regions with limited adaptive capacity.

Sectoral Impacts and Geographic Disparities

Agriculture, transport, energy, and manufacturing all suffer. Crop yields fall in lower latitudes, while urban infrastructure faces repeated flooding and heat extremes. Low-income countries bear the brunt of losses despite contributing least to emissions.

• Agriculture & food security: yield declines, price spikes, malnutrition risks.
• Infrastructure & urbanization: rising maintenance costs, greater insurance premiums.
• Health systems: increased hospitalizations, lost productivity, rising public expenditures.

The poorest regions face the steepest economic declines—up to $32 trillion lost by mid-century—exacerbating global inequality and social unrest.

Modeling Uncertainties and Limitations

While models provide critical insights, they often underestimate compound impacts and “fat-tail” risks. Many ignore permafrost thaw, ice-sheet collapse, and nonlinear tipping points that could double projected damages.

Key limitations include data gaps in emerging markets, insufficient subnational granularity, and difficulty quantifying rare, high-impact events. As modeling improves, the economic case for swift action only strengthens.

Policy Priorities and Action Levers

Evidence shows front-loaded spending on mitigation and adaptation is both urgent and cost-effective. The following levers can guide policy:

• Scale up climate finance: mobilize public and private capital towards low-carbon infrastructure.
• Enhance resilience: invest in disaster risk management and nature-based solutions.
• Promote equitable support: target the most vulnerable regions with technology and funding.

By adopting smart urban planning, strengthening regulatory frameworks, and fostering innovation, governments and businesses can reduce risk, unlock co-benefits for health and livelihoods, and safeguard long-term growth.

Ultimately, the economic toll of inaction far outweighs the upfront costs of transition. Every dollar spent on mitigation and resilience returns up to tenfold in avoided damages, improved well-being, and social stability.

Now is the moment to embrace an inclusive, forward-looking economic strategy that aligns climate goals with development priorities. By investing wisely today, we can secure prosperity and security for generations to come.