The global economy is at risk of a catastrophic collapse due to the climate crisis, warn experts. As the planet warms, the frequency and intensity of extreme weather events are increasing, posing a significant threat to economic stability. Current economic models, used by governments and financial institutions, fail to account for these potential shocks, leading to a dangerous underestimation of risks. The consequences of this could be devastating, with some experts predicting a 50% loss in global GDP by 2090. The report, compiled by a team of 68 climate scientists, highlights the need for a shift in focus towards extreme events and the vulnerability of the financial system. It emphasizes that the traditional approach of linking climate damage to average temperature changes is insufficient. Instead, it calls for a greater emphasis on the cascading failures and compounding shocks that define climate risk in a warming world. The report also highlights the potential for GDP to mask the true cost of climate damage, as it fails to account for deaths, social disruption, and degraded ecosystems. This could lead to a false sense of security, as investors and policymakers may underestimate the real-world consequences of climate change. The experts urge a faster transition away from fossil fuels to avoid large future losses, as the current economic models provide overly optimistic estimates of potential losses. The situation is dire, and the need for action is urgent. The world must take steps to mitigate the risks and avoid a global financial crash, as the consequences of inaction could be catastrophic.
