The effects of climate change since 2000 will slow US economic growth slightly over the next 30 years, adding another drag on an economy that will struggle to rebound from the coronavirus pandemic, the Congressional Budget Office (CBO) said on Monday.
In a new research paper, the nonpartisan budget referee agency studied both positive and negative contributions to gross domestic product, from longer growing seasons in colder climates to drought to damage to factories from more intense storms.
It projected that on net, climate change will reduce real US GDP by an average of 0.03% annually from 2020 to 2050, compared to what US growth would have been if global climate conditions remained the same as they were in 2000.
That reduction in the growth rate, accumulated over 30 years, lowers the CBO’s projected level of real GDP output in 2050 by 1%, the paper showed.
The findings were incorporated into the CBO’s long-term budget outlook released on Monday, which projected that US federal government debt now is expected to reach nearly double the country’s GDP output in 2050 as interest costs from increased borrowing run annual budget deficits higher.
CBO researchers said that some aspects of climate change are incorporated quickly and directly, while others are more indirect and could take longer to manifest themselves. For example, extreme heat that lowers a farmer’s crop yield would immediately reduce that farmer’s contribution to GDP. A farmer in a cold-weather location might experience a longer growing season, increasing contributions to GDP.
{{/usCountry}}CBO researchers said that some aspects of climate change are incorporated quickly and directly, while others are more indirect and could take longer to manifest themselves. For example, extreme heat that lowers a farmer’s crop yield would immediately reduce that farmer’s contribution to GDP. A farmer in a cold-weather location might experience a longer growing season, increasing contributions to GDP.
{{/usCountry}}A hurricane that destroys $50 million worth of factory equipment would affect GDP in several ways, including reduced production immediately, and money spent to replace the equipment. But the overall capital stock would be smaller in the future, as a result of foregone investments to pay for the replacement costs, leading to less GDP output in the future, the CBO said.
The CBO said the research comes with a high degree of uncertainty and the projections represent the middle of a range of outcomes.