The world’s hottest years over the past decade have coincided with stagnant economic productivity, rising prices and geopolitical instability.
Is this just coincidence or has the current level of climate change been one of the drivers? Climate change is often framed as a problem for the future. But how much economic damage has today’s current level of ~1.35°C of warming already caused?
To answer that question, we analysed the effects of climate change to date on the New South Wales economy. The results were released today as part of a Net Zero Commission report.
We estimate climate change has already caused median losses of around 18% (probability range 4–33%) to the NSW economy, the biggest economic jurisdiction in the country. At a median 18% loss, that translates to about A$21,300 per person on average in yearly income.
We show that it’s not local bushfires or flooding that are driving the majority of damage, but changing global weather that in turn affects our cost of living.
Imagine a world without climate change
Studies typically project the global economic damage that climate change will do by 2050 or 2100.
Some influential estimates have suggested climate damage would be fairly small. But our recent research and work by others shows the economic damage coming down the pipeline could be more than four times larger than previously thought.
Our research question for this report was different: “What would the NSW economy look like today if historical emissions of greenhouse gases had not caused climate change?”
This requires a thought experiment: imagining a past where we burn fossil fuels at the historical rate, but the additional carbon dioxide and other atmospheric gases do not cause changes to temperature or rainfall patterns.
Answering this question will allow us to understand the economic losses we have already endured from historical climate change.
How we did it
First, we collected data on historical economic growth and weather across the world over the past 70 years. We then modelled how weather changes (or shocks) impacted economic growth over this period. There is significant debate on how to do this, so we adopted a variety of approaches.
Then we had to plausibly guess at how the weather would have evolved in the past four decades without climate change. To create this hypothetical weather series, we simply removed any trend found in the weather data which we ascribe to human-caused climate change. This works because there is no evidence natural causes have contributed to the upward trend in temperatures.
Finally, we compared economic growth rates predicted by the models under the observed and under the hypothetical weather conditions. The contrast between the total economic production of the NSW economy in the two scenarios is the economic cost of historical climate change for a given year.
What we found
We estimate the median economic loss for NSW in 2024 was 18%. There is significant uncertainty in this figure, with the lower estimates around 4% and the higher around 33%.
The median loss figure of 18% translates into an average of $21,288 in losses per person in yearly income (in 2023–2024 dollar values). In other word, the model finds that if historical warming had not occurred then people living in NSW would each have $21,288 more dollars, on average, in their pockets every year. This amount is large enough to meaningfully improve the quality of life of the state’s average household.
The models suggest the primary mechanism through which this loss has occurred is the rise in the global average temperature. When people think about losses associated with climate change in NSW, they might consider how climate change exacerbated the bushfires of 2019–20, or the floods that followed. The damages they caused are, of course, real and significant.
However, the economic models suggest the majority of the damage has come from shifts in weather globally. Given the interconnectedness of modern economies through trade and global supply chains, it is reasonable to assume that climate shocks to supply chains affect the whole globe.
Eric Seddon/Pexels, CC BY
How we think about climate change
When pollsters ask Australian voters what issues they care about, “climate change” is often listed as one issue among many. Voters are asked to assess how important climate change is to them relative to the cost of living, public health, interest rates, secure employment, and other important things.
Presenting issues in this way reinforces a common misconception that they are independent, and that one can be prioritised over the other.
To the contrary, there is now good evidence that climate change is strongly related to economic outcomes, which in turn drive the cost of living, interest rates, investment in in health and education and the labour market.
It’s time to stop thinking of climate change as “merely” an environmental issue, which can be discarded when economic times are tough. Instead, we should recognise what it really is: a current and ongoing threat to our standard of living.
Timothy Neal, Senior lecturer in Economics and the Institute for Climate Risk and Response, UNSW Sydney and Ben Newell, Professor of Cognitive Psychology and Director of the Institute for Climate Risk and Response, UNSW Sydney
This article is republished from The Conversation under a Creative Commons license. Read the original article.
The authors blame droughts, bushfires and floods for the major reduction in NSW’s economic well-being, but none of these 3 events are proven to be caused 100% by climate change. Instead, they are weather events, likely worsened by human-influenced climate change but not 100% the result of climate change.
In addition, here in south west WA, the grain harvest produced by our farmers is continuing to set annual records, in part caused by higher atmospheric CO2 levels but also be changing weather patterns which are extending the growing season courtesy of more rain and cooler weather in springtime. I expect similar benefits from climate change, if that is what’s causing these changes, must also be enjoyed by NSW farmers.
Climate alarmists tell us that the earth orbits the sun perfectly like a Swiss watch & does not change course, not even slightly over thousands & millions of years & if it did, even slightly, it would contribute much more to the earths temperature which we have seen change every 100 years or so & over millions of years it has experienced extreme heat & cold like the Ice Age & much more than what increased CO2 levels would do. If you believe the earth orbits the sun like a Swiss watch & never changes course over millions of years then i have a bridge i would like to sell you. As they say, if you want the truth then just follow the money & you will find what motivates activism. Its usually money.
“The Net Zero Commission’s Economic Impacts of Climate Change in NSW brief provides clear evidence that climate change is already driving up costs and reducing incomes in New South Wales, with impacts set to intensify without action.”
“Key findings:
Climate change has already imposed material economic costs on NSW”……. it claims !!!
[ Like what for instance ? Bush fires that were exacerbated BECAUSE the fire-services FAILED to conduct appropriate PREVENTIVE-BURNING because they were “constrained by Greenies opposing it” !!??? FLOODS because they stupidly BUILD ON FLOOD-PLAINS ?
And following inaccurate advice from “their guru Tim Flannery” that it “was never gunna rain again” !!! and similar unhelpful and misleading advice and ideas !???? ]
It supplies NO supporting data…..other than the CLAIM IT DOES and “modelling” !
“We then modelled how weather changes (or shocks) impacted economic growth over this period. There is significant debate on how to do this, so we adopted a variety of approaches. [ None of them USE SCIENTIFIC METHODS which are devoid of EMOTION ! ]
Then we had to plausibly guess at how the weather would have evolved in the past four decades without climate change.”
SO THEY MODEL IT [ All models have produced results , which are at best , dubious !!! ] AND THEN THEY “GUESS” …….their words ,NOT mine !!! Really ???…THAT’S SUCH AN UNSCIENTIFIC and EMOTIONAL APPROACH that leaves LOTS OF ROOM FOR DOUBT !!
……………………………………………………………………………………………………………………………………………..SO…..NO…….IT DOESN’T SUPPLY ANY SUCH EVIDENCE ! ……..IT’S ALL SUPPOSITION !
IT MERELY MAKES PRONOUNCEMENTS “from a position of authority” AND OFFERS A DEFENCE FOR IT’S OWN EXISTENCE…….and that is to promulgate NET ZERO ideology and “earn their stipend” [ The overall budget for the NSW Net Zero Commission is $6.7 million for the 2025–26 financial year, which increased from $4.8 million allocated during its inaugural 2024–25 financial year…..so there is an ANNUAL COST which is being generated and incurred unnecessarily ! THAT could and should go immediately !! ]
THEY PRESENTED NO FACTS and NO EVIDENCE ! ………….They in fact LIE !.
“Then we had to plausibly guess at how the weather would have evolved in the past four decades without climate change. To create this hypothetical weather series, we simply removed any trend found in the weather data which we ascribe to human-caused climate change. This works because there is no evidence natural causes have contributed to the upward trend in temperatures.” ALTOUGH THERE ARE REAMS OF ACTUAL EVIDENCE THAT CLIMATE CHANGE IS A REGULAR cyclical , predictable and NATURAL EVENT !
Every “geologist” and “truthful scientist” can attest to ABUNDANT geological EVIDENCE of CLIMATE CHANGE [ in rocks , reefs , mineral deposits and everything else they study !]. WHY do “we” PAY and also tolerate these obfuscating PROFESSIONAL LIARS ????
It is long past time that they were hauled-over-the-coals and prosecuted !!!