Is there an optimum temperature for the global economy?

Climate change will hit the global economy by pushing many nations above the optimal temperature for economic activity, according to a paper published by Nature.

The study looks at the relationship between temperature and economic output in 166 countries over 50 years. It suggests that climate change will widen inequality because global warming is more harmful to hot countries, which tend to be poorer, and has a smaller positive impact on cold countries, which tend to be richer.

Source:  Burke, Hsiang, & Miguel (Nature, 2015)

The analysis identifies an optimal temperature band centred on 13°C, calculates that global warming will push many economies, including China and the US, above this level, and forecasts a 23% cut in global economic output by 2100 compared to a world with stable temperatures. Meanwhile, the average income in the poorest 40 countries is predicted to fall by 75%.

The analysis focuses solely on the impact of temperature change and doesn’t take into consideration extreme weather events and rising sea levels.

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Publication does not imply endorsement of views by the World Economic Forum.

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Author: Emma Luxton is a Digital Content Producer at Formative Content.

Image: A ship travels north on the Hudson river past the Manhattan borough of New York City. REUTERS/Mike Segar.