An Economist’s Dire Forecast About Just How Much Climate Change Will Impact GDP

Last year was officially the world’s warmest since records began in 1850. In fact, the average global temperature rise in 2024 was just shy of 1.5 degrees Celsius since then, the target set by the Paris climate agreement. 

As costly disasters multiply around the planet, some financial experts are raising alarms about what even more climate disruption could mean for the global economy decades in the future. Economic modeling by the University of Exeter and the Institute and Faculty of Actuaries in the U.K., projects that proceeding with business as usual without sharply reducing emissions could cut global gross domestic product (GDP) in half as soon as 2070.

Dr. Tim Lenton is a professor at the University of Exeter and a co-author of the 2025 Planetary Solvency Report. This interview has been edited for length and clarity. 

JENNI DOERING: Your report really drills down and looks at the numbers in terms of the potential of climate change hit to global GDP. You find that there’s an up to 50 percent loss in global GDP between 2070 and 2090. That’s a staggering number. Why is that figure so high, and what is at risk economically? 

TIM LENTON: I’m not the only climate scientist who would tell you that if we go to 3 degrees Celsius of warming later this century—which is roughly where we’re heading on current policies—or, if we’re unlucky, and the climate is more sensitive, and that turns out to be 4 degrees Celsius or even more, we see such fundamental changes in the habitability of large areas of the planet that we find it hard not to conclude that there could be some kind of major social disruption, and thus an economic breakdown. 

You could think of it as a fifty-fifty chance of losing everything or having a major social collapse, because you’ve got to be careful here. Some economists say ‘Oh, a 50 percent reduction is not so bad if we’re going to be three or seven times richer later this century.’ But what we’re really highlighting is a major loss of the economy, societies and productive capability. 

DOERING: Why was it important for you and your colleagues to focus on GDP? 

Dr. Tim Lenton is a professor at the University of Exeter.

LENTON: Actually, we would rather not frame the results in terms of GDP, because GDP is well known to be a flawed measure of human progress or utility or well-being. But given that everybody, or culture in general, seems to be speaking in this narrow economic language, we felt it was perhaps in order to get the message across, important to stress impacts on GDP, even realizing how flawed a measure it is. 

But one can get a sense of the risks to capital and to productivity just by observing today. There’s large-scale withdrawal of insurance from real estate, and real estate is what props up the economy, as we all observed in 2007-2008, when there was a financial crisis because real estate values and expectations were mispriced. 

DOERING: Thinking back to 2007 and 2008 and the recession that followed, it was a pretty bad time for the world economy, and we might be heading for much worse, it sounds like you’re saying, 

LENTON: We’re saying you can certainly see scenarios where things could be a lot worse. We’re really trying to look at the existential risks to the viability of life or the economy as we know it. 

DOERING: We’re talking about a potentially huge economic toll. What are the climate risks that we run as we continue to change the climate?

LENTON: We’re probably all now aware that there was a big uptick in extreme climate events, and we’ve all just seen some examples in the L.A. wildfires and last year’s flooding in Valencia, Spain. 

But in the broader sense, we’re risking crossing tipping points in the climate, which would mean that we trigger a self propelling, often rapid and hard to reverse change in some major bits of the climate that are doing good things for us at the moment but will be causing trouble if they tip. 

That means the loss of major ice sheets leading to much larger, faster and longer-term sea level rise. It means tipping the loss of the Amazon rainforest and replacing it with some kind of degraded forest or savanna. And then there’s tipping points in the circulation of the ocean or the atmosphere, or the two of them coupled together. For example, if we have a big tipping point in the Atlantic Ocean [Meridional] Overturning Circulation. We calculated the knock-on consequences for production of major crops like wheat and maize would be like a 50 percent reduction in the viable area for growing those stable crops worldwide. So a huge food and water security crisis, in other words. 

DOERING: Those are just staggering impacts. What’s the gap between the findings of your report and other commonly used predictions of climate risk? 

LENTON: There’s a large gap from some of the scenarios or predictions that have been used. The early ones, for example, said that only activities in the economy that were happening outdoors could be impacted by climate change, like agriculture and maybe a bit of opencast mining, and that was only a small percentage of the total economy, something like 10 percent, and the other 90 percent was immune. But we know that that’s nonsense, because we all have to get to work, for example, we also all have to eat, and somebody’s got to grow your food. So you have to think in a more systemic way, clearly. 

DOERING: If you’re right about the scale of the risk here and the potential for such widespread economic pain, why is the world seemingly in denial? 

LENTON: Some are and some aren’t. I think it would be a fair appraisal that not everyone’s in denial, and in fact, public surveys across the world typically show that at least three quarters of people think not only is climate change real and due to human activities, but that their government should be doing something more decisive about it. So I think there’s a silent majority who absolutely aren’t in denial. 

But why do we struggle with the issue in general? Because we’ve tended to perceive that climate change, firstly, is due to invisible gases that we can’t see. A lot of its impacts unfold over long-ish time horizons. So even if they’re really big, big risks, they’re not like a saber-toothed cat running toward us in the savannah, which is where our brains evolve to deal with risk. And that’s the brain we’ve brought into today’s world with all its complex problems of our own making. And then there’s enormous vested political and economic interests in the status quo, and one should never underestimate their power. 

DOERING: Observing the political landscape right now, whether you look just in the United States or outside of it, one might say that things aren’t looking super hopeful in terms of tackling this crisis. 

LENTON: I’d have to agree with you there, but there are other forces at work in the world, like the fact that in the energy system, the cheapest form of power worldwide now is renewable energy. In fact, it makes economic sense in over half the world to close existing fossil fuel power stations and replace them with new renewables and battery storage. The more we deploy solar panels or wind turbines or battery storage, the cheaper it gets and the better it gets. And that’s a really powerful reinforcing feedback that I would argue is so strong now that we might have passed a positive tipping point where the transformation to a renewable energy economy is to some degree unstoppable, although there are still battles to be won there. 

There’s a backlash against electric vehicles where there really shouldn’t be. They’re close to the tipping point of being the obvious, cheaper and better option, but they’re not quite there yet, certainly not in the U.S. market. But we’re getting close to what I call positive tipping points in major sectors in the economy.

DOERING: How should we as individuals prepare and what should we know about how our day-to-day lives may change under these scenarios that you’re looking at? 

LENTON: It’s a great question, because I have to answer it myself, with my own kids and family. 

The first thing to say is, there are these climate risks escalating, and we’re not sure we’re going to avoid them, but we’re stronger together, and we all have got some agency to make the changes that are going to be good for us in lots of ways. They’re going to bring all sorts of co-benefits, like clean air from electrifying transport. 

At the same time, we can be part of the social movement to make those changes, and if you like, democratically, try to force our governments to act more decisively, if we choose. 

I could give a raft of examples of how we’ve all got some agency to tackle the underlying drivers of climate change but at the same time, we’ve got to admit that we’re already seeing nasty damages, and we’re not going to be able to avoid all of those. So then it’s, what agency have we got to cope with nasty events that unfold? In social resilience, that’s often built on trust. Building trust in our communities and our societies is a crucial part of building resilience and adaptability, the capability to respond to a changing world. 

DOERING: I imagine that when we’re into the 2070s to 2090s, you’d be getting up there in age, and your kids would be adults. What’s the world you hope that they would be living in in that later part of this century? 

LENTON: My two children are 14 and 15, nearly turning 16, so they certainly will be around then. I’m doing everything in my power to communicate the possibility for us all to get involved and exert the agency to make the change, the transformation, that means they’ll be living in a future world that might be somewhere between one and a half and two degrees warmer than the pre-industrial level.

There will be some climate challenges, but we will have made the transformation to clean energy and to stopping the destruction of nature. We will be in a situation where we’re growing or regenerating nature while enjoying the cheapest electricity ever, and we’ve electrified most of our activities. 

I think about that a lot, because it’s the actions and the decisions we make now through 2050 that make all of the difference in which of those worlds my kids are going to end up in.