Future incomes will shrink as the planet warms

What if the biggest threat to your paycheck this century isn’t taxes, recessions, or job markets – but rising temperatures? A new study suggests that unchecked climate change could take a major bite out of incomes worldwide by 2100.

If greenhouse gas emissions stay high, the researchers calculate that average income per person could fall by 20 to 24 percent compared to a world where warming halts. And while no country escapes the impact, hotter and lower-income nations are hit hardest – facing losses 30 to 60 percent above the global average.

The research, led by Dr. Kamiar Mohaddes and colleagues at Cambridge’s climaTRACES Lab, analyzed 174 countries, tested multiple warming scenarios, and built in both adaptation speeds and natural weather swings.

No nation is immune

The study was focused on how temperature changes ripple through growth and incomes over time, measured by GDP per capita – the total value of goods and services produced in a country divided by its population.

“We show that no country is immune from the impact of climate change if greenhouse gas emissions are not curtailed,” said Dr. Mohaddes

The team also compared future temperature paths from the IPCC with two baselines. One baseline continued each country’s historical warming trend from 1960 to 2014, and the other held temperatures fixed to test a no further warming case.

They examined how sustained increases above a country’s normal climate affect long-run growth. That means they looked at departures from the typical 30-year average, not just a single hot year.

Measuring more than hot years

Economists have long shown that deviations from normal temperature can dent output, especially when those deviations recur.

One influential paper found that hotter-than-usual years slow growth in many countries, which adds up when it happens repeatedly.

This new study extends that logic to persistent warming. Instead of asking how one hot summer hits output, it asks what happens when the new normal itself keeps shifting upward.

Income losses under warming

Under a path where temperatures rise about 0.04 °C (0.072 °F) each year with minimal mitigation or adaptation, the study estimates significant losses. By 2100, global income per person could fall by roughly 10 to 11 percent relative to the continued-trend baseline.

When natural climate variability is included, that loss grows to about 12 to 14 percent. Compared with a hypothetical case of no further warming and extremely slow adaptation, the high-emissions path yields a 20 to 24 percent drop in global income per person by 2100.

A pathway aligned with the Paris Agreement holds warming to roughly 0.01 °C (0.018 °F) per year. Under this scenario, global income per person shows a small gain of about 0.25 percent relative to the continued-trend baseline.

Warming hits nations differently

Income losses from warming are not uniform across the globe. Hotter and lower-income countries face damages 30 to 60 percent above the global average because they tend to be closer to heat stress thresholds and have fewer resources to adapt.

Cooler, wealthier nations are not spared either. Earlier research shows that unmitigated warming could cut average global incomes by about 23 percent by 2100 compared with a world without climate change. The impacts spread across latitudes.

On top of these uneven damages, natural variability adds another layer of risk. Year-to-year swings such as El Niño events can raise global temperatures, shift rainfall patterns, and intensify the blow to output in vulnerable regions.

The study includes variability, raising projected global income losses from 10 to 11 percent to about 12 to 14 percent with short-term shocks.

Heat harms more than farms

Heat affects more than farms. Transport slows when rail lines buckle or roads soften. Factories lose productivity as workers and equipment struggle in high temperatures, and retail demand shifts when energy bills spike.

Evidence from the United States shows that temperature and precipitation swings still pull on growth across sectors such as construction, manufacturing, and services, even with some adaptation.

A nationwide assessment linked higher temperatures to rising mortality, lower labor productivity, costlier energy, and damages from coastal storms, which together cut national output as heat climbs.

Income benefits of slower warming

The Paris-aligned path slows the pace at which the long-term temperature trend rises. In the study’s framework, that matters because economies are most sensitive when the trend keeps accelerating.

Slowing the trend gives households, firms, and governments more time to adjust technologies, infrastructure, and behavior. It does not eliminate damages, but it reduces how much compounding loss builds up over decades.

Limits of adapting to heat

Adaptation lowers the pain but cannot erase it when warming persists. The study tries out faster and slower adaptation speeds by changing how quickly the definition of normal climate updates.

Faster adaptation trims losses but leaves a sizable gap versus a world where warming stops.

That is because many responses, like redesigning cities or relocating assets, take years and capital, and some climate impacts have no easy fixes.

Damage already underway

The world has already warmed about 1.2 °C (2.16 °F) above preindustrial levels. This rise has already baked some damage into recent growth records.

The authors estimate that above-normal temperatures shaved about 2 percent off global income from 1960 to 2014 in purchasing-power terms.

The new results imply that the future bite will be larger if the warming trend accelerates relative to the past. That is the risk embedded in higher-emissions scenarios.

The study is published in the journal PLOS Climate.

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