Canada’s economy could shrink by 6.9 per cent per year by 2050 without more ambitious climate action – Oxfam
Human and economic impact on low-income nations will be much worse
Canada’s economy could shrink by 6.9 per cent annually by 2050 without more ambitious climate action, according to Oxfam’s analysis of research by the Swiss Re Institute. Across G7 nations, the impacts of climate change could cause economies to contract by an average of 8.5 per cent annually by 2050 ― equivalent to $4.8 trillion. Oxfam is calling on Canada and other G7 leaders, who are meeting in the UK later this week, to cut carbon emissions more quickly and steeply.
Oxfam found the potential loss in GDP across G7 nations is double that of the coronavirus pandemic. The pandemic has caused G7 economies to shrink by an average of 4.2 per cent, resulting in staggering job losses — especially for women, who have also shouldered increased care responsibilities — and required some of the largest economic stimulus packages ever seen. Yet, G7 economies are expected to bounce back from the short-term effects of the pandemic. In contrast, the effects of climate change will be seen every year, and are already having disproportionate impacts on women around the world due to gender inequalities that increase their vulnerability to climate-related risks and disasters.
Swiss Re modelled how climate change is likely to affect economies through gradual, chronic climate risks such as heat stress, impacts on health, sea level rise and agricultural productivity. All of the 48 nations in the study are expected to see an economic contraction, with many countries predicted to be hit far worse than the G7. For example, by 2050:
- India, which was invited to the G7 summit, is projected to lose 27 per cent from its economy;
- Australia, South Africa and South Korea, also invited, are projected to lose 12.5, 17.8 and 9.7 per cent respectively;
- The Philippines is projected to lose 35 per cent;
- Colombia is projected to lose 16.7 per cent.
Oxfam warns that for low-income countries the consequences of climate change could be much greater. A recent study by the World Bank suggested that globally, between 32 million and 132 million additional people will be pushed into extreme poverty by 2030 as a result of climate change.
The economic case for climate action is clear ― we need Canada and other G7 governments to increase climate finance and take dramatic action to cut emissions in the next nine years.
Anya Knechtel, Climate Policy Specialist at Oxfam Canada, said: “As a G7 nation, Canada needs to step up to the challenge of creating a safer, more liveable planet for all. The economic turmoil projected in wealthy G7 countries is only the tip of the iceberg: developing countries are expected to see increasing hunger, displacement and deaths as a result of extreme weather and other climate impacts, with women, Indigenous peoples, and others whose livelihoods depend on climate-vulnerable resources being particularly harmed. Prime Minister Trudeau and other G7 leaders need to make this year a turning point in taking action to cut emissions more quickly and increase climate finance.”
Canada and other G7 governments are collectively falling short on delivering a longstanding pledge by developed countries to provide $100 billion per year to help poor countries respond to the climate crisis. Oxfam estimates the G7’s current commitments amount to $36 billion in public climate finance by 2025, with only a quarter ($8-10 billion) of that for adaptation. Canada has yet to announce whether it will increase its climate finance commitment, or whether it will offer greater support in the form of grants to countries seeking to undertake gender-responsive climate adaptation amidst spiralling debts made worse by the pandemic.
At the Earth Day Summit, Canada announced a new commitment of 40 to 45 per cent emissions reduction by 2030 from 2005 levels, but this target falls short of Canada’s fair share of global reductions needed to limit warming below 1.5°C. Oxfam is calling on Canada to immediately raise its emission reduction commitments to deliver its fair share of the global reductions needed to keep global warming below 1.5°C.
Achieving Canada’s fair share would require cutting domestic emissions by at least 60 per cent below 2005 levels by 2030, as well as doubling current climate finance commitments in the near term and further ramping up climate financing over time to help developing countries reduce emissions and adapt to the impacts of climate change.
Canada and other G7 nations are some of the world’s largest historical emitters ― responsible for a third of all CO2 emissions since 1990 ― and they should be leading by example through action on the climate crisis in this crucial year.
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Notes to editors:
Summary of GDP projections and climate pledges of G7 nations:
| Country | Predicted GDP loss by 2050 assuming 2.6°C of warming | Emission reduction commitment | Climate finance pledged to 2025 (as of June 1, 2021) |
| Canada | -6.9% | 40-45% reduction by 2030 on 2005 levels | Not yet stated |
| France | -10% | No new national level commitment yet (but new EU objective is 55% below 1990 by 2030) | Maintain current levels of €6 billion ($7.3bn) a year, with €2 billion of that for adaptation |
| Germany | -8.3% | 65% reduction by 2030 on 1990 levels as part of the new EU objective of 55% below 1990 levels by 2030. | Not yet stated |
| Italy | -11.4% | No new national level commitment yet (but new EU objective is 55% below 1990 by 2030) | Not yet stated |
| Japan | -9.1 | 46% reduction by 2030 on 2013 levels
|
Not yet stated |
| UK | -6.5% | 68% reduction by 2030 on 1990 levels | £11.6 billion ($16.5bn) over the period, with 50% for adaptation |
| US | -7.2% | 50-52% reduction on 2005 levels | $5.7 billion per year by 2024, with $1.5 billion (26%) for adaptation |
| Average | -8.485714% | N/A | N/A |
- The Swiss Re Group is one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, working to make the world more resilient. It anticipates and manages risk – from natural catastrophes to climate change, from ageing populations to cybercrime. The aim of the Swiss Re Group is to enable society to thrive and progress, creating new opportunities and solutions for its clients. Headquartered in Zurich, Switzerland, where it was founded in 1863, the Swiss Re Group operates through a network of around 80 offices globally.
- Projections of GDP loss are from Swiss Re Institute’s Economics of Climate Change The authors modelled the economic impacts of climate change on 48 countries in four different temperature paths and used different impact scenarios to account for the large parameter uncertainty and missing climate impact channels usually present in the climate economics literature. The projections used in this press release assume high stress factors and global warming of 2.6°C by mid-century, which is a level of warming that could be reached based on current policies and climate pledges from all countries. All figures relate to real GDP. The GDP projections compare a warmer world with a world unaffected by climate change.
- GDP losses in G7 countries as a result of the pandemic are from the UK’s Office for National Statistics and refer to real GDP between October 2019 and September 2020.
- World Bank projections of the number of people who will be pushed into extreme poverty are here.
- Estimates of climate finance were calculated by Oxfam and include pledges of public climate finance, not ‘mobilized’ private finance.
- Cumulate CO2 emissions for all countries was 803.84 billion tonnes in 1990 and 1,650 billion tonnes in 2019, a difference of 849.08 billion. Cumulative CO2 emissions for the G7 nations combined was 461.2 billion tonnes in 1990 and 740.39 billion tonnes in 2019, a difference of 279.17 billion. G7 nations made up 32.88 per cent of all emissions since 1990. Source: Our World in Data: https://ourworldindata.org/co2-emissions