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COP28 UAE: The Economic Impact of Climate Change

In a world dominated by wars, artificial intelligence, and viral trends, climate change often gets overlooked. It’s the ignored guest at the party, the last dish picked in a buffet. Despite its lack of appeal and the skepticism of some, climate change is a reality that affects us all.

Climate Change and Your Finances

What if I told you that climate change is also affecting your finances? It’s burning a hole in your pocket. Last year, climate change shaved billions off the world economy. According to a new report released ahead of the COP 28 Summit, in 2022, climate change cut 6.3% of the world’s global economic output. As temperatures rise, so does the economic toll. However, the burden is not the same across all countries.

The Disproportionate Impact on Poorer Nations

Some countries are more affected than others, particularly the poorer nations. Take Africa, for example. It contributes to just 4% of global emissions, but the continent is the hardest hit. In 2022, 110 million people were affected by climate change, with a total loss of 8.5 billion. By 2030, Africa could lose 10 to 20 billion every year due to climate change.

A similar situation is unfolding in South Asia, one of the worst affected regions in the world. Agriculture, the backbone of these economies, is being disrupted by floods and droughts, leading to food shortages. India has already sounded a warning: 4.5% of India’s GDP could be at risk by 2030 due to lost labor hours. Without any action, South Asian economies could shrink. If this trend continues, the total economy of South Asia could shrink by 1.8% by 2015. Australia too could face economic losses, with climate change potentially cutting their GDP by $274 billion.

COP28-UAE

The Irony of Climate Change

Ironically, some nations are faring better due to climate change. Europe, for instance, is becoming warmer due to climate change, leading to a near 5% gain in net GDP last year. However, these gains are only short term, as warmer summers will soon be offset by colder winters.

The Urgent Need for Action

There is an urgent need to address all of this. At the COP 27 last year in Egypt, the solution proposed was a damage and loss fund. Nations agreed to set up this fund to help vulnerable countries offset the economic loss of climate change. However, one year has passed since that summit, and we are just days away from COP 28, but the details of that fund are still blurry.

The economic toll of climate change is not a distant specter. It is happening as we speak. Talks and discussions can only get us so far. What we need now is concrete action. Governments must focus on solutions like embracing renewable energy, sustainable practices, and building climate-resilient infrastructure. Climate financing should not just be another debate; it should be priority number one. Historical emitters must pay up for the damage they’ve done. This is not charity; it’s the need of the hour.

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