The Economist Intelligence Unit (EIU) has scored the world’s 82 largest economies on their ability and willingness to confront climate change. The index also assesses country-specific economic impacts.

The Climate Change Resilience Index rates countries on eight indicators that assess their capacity to withstand the impacts of higher temperatures and more extreme weather events.

The EIU’s research shows that being rich is an advantage, but institutional quality matters, too. Institutional quality is a major determinant of long-run economic growth, but The EIU’s results also point to the importance of institutional quality for minimising the impact of climate change. Poor institutions, therefore, can simultaneously harm economic growth and exacerbate the negative impacts of climate change.

John Ferguson, The EIU’s Country Analysis Director, says the index reveals the vulnerabilities that exist in developing countries to the oncoming impacts of climate change.

“The impacts of climate change are already being felt – we are already seeing the effects of more extreme weather events – but the economic impacts will only grow over time. It’s important to remember that a 3 per cent loss of real GDP in 2050 is highly significant for the global economy, and that there will be economic losses in every year of the coming three decades.”

There is also uncertainty in forecasting the impacts of climate change. For example, The EIU has assumed that countries make a modest effort to meet their goals as stated in their INDCs (the intended nationally determined contributions as set out for the Paris Climate Agreement). However, the progress in this space and the implementation of these policies could easily disappoint. In fact, the economic impacts could be much worse than those highlighted in The EIU’s model.

Mr Ferguson says countries, both developed and developing, will need to make a greater effort on the domestic front to meet their goals on adaptation and mitigation for the economic impacts to be reduced.

“Moreover, international co-operation will be critical to giving the global climate any chance of keeping the temperature increase to 1.5 degrees from pre-industrial levels. Policy, technology and financial co-ordination will be necessary to enable best practice in both mitigating carbon emissions and adapting to the climate impacts.”

The EIU found that:

• The Asia-Pacific economy will be 2.6% smaller in 2050, with developing countries in the region set to be the most affected.
• There will be economic losses in every year leading up to 2050, with the risk that further losses could be seen if policy effectiveness is not improved.
• Africa is the least resilient region to the impact of climate change (4.7% smaller), followed by Latin America (3.8%), the Middle East (3.7%), Eastern Europe (3%) and the Asia-Pacific.
• North America (1.1% smaller) and Western Europe (1.7%) display the most resilience and are likely to see the least impact economically because both regions are richer and more prepared to tackle climate change from an institutional standpoint.

Regional and Global GDP losses by 2050

The full report can be downloaded here.