A new Australian study has shown that if the world fails to stick to the Paris Climate Agreement cap of 2 degrees Celsius, it could cost $23 trillion a year in the long term.
The study, published in the journal Earth's Future uses an economic model typically employed by banks and governments to look at the effects of global warming on 139 countries in comprehensive detail.
The model works by calculating the economic impact of things like rising sea levels, loss of land, health effects, and loss of agricultural productivity for each country.
These losses were them calculated in terms of gross domestic product (GDP) loss.
The authors found that if the world does not manage to limit the Earth's temperature rise to 2 degrees Celsius by the end of the century, as described in the 2016 Paris Climate Agreement, and it instead rises to 4 degrees Celsius, the world could face losses of $23 trillion a year in GDP.
Lead author of the paper, Professor Tom Kompas, an environmental economics researcher from the University of Melbourne, told BuzzFeed News that he was stunned by the results.
Kompas said that these losses are equivalent to the world experiencing between four and six global financial crises a year.
"It's a real eye-opener, right? If you don't switch the energy mix now, you're going to end up with severe damages in the future," said Kompas.
"This is a real bad wake-up call, there's severe damages on the horizon, you need to do something now to limit those damages."
Unfortunately, according to an article published in Nature last year, it seems unlikely that the world will be able to achieve the 2 degrees Celsius cap outlined by the Paris Agreement.
The paper stated that there was only a 5% chance that global temperatures will only increase by 2 degrees celsius and will instead likely rise 3.2 degrees Celsius (and possibly by up to 4.9 degrees Celsius) by 2100.
For Australia, this new global economic impact study found that if the global temperature did reach an increase of 4 degrees Celsius, this would result in GDP losses of $159 billion a year.
Kompas says that this equates to losses of approximately $5,000 for every Australian, every year.
However, Australia may get off lightly compared to other regions – the study found that poorer countries will ultimately be the hardest hit by the effects of climate change.
The outcomes showed that countries in South Asia, Southeast Asia, and Africa will be most severely impacted by temperature increases.
Kompas said this "emphasises the equity puzzle that goes with these effects – many countries that are major per capita greenhouse gas emitters are the ones less impacted by climate change; countries with relatively less emissions are more severely impacted."
Kompas also notes that this study did not take into account the effect of tropical storms, which have already been shown to be increasing in frequency and severity as a result of climate change.
Kompas and his team are in the process of publishing another paper that observes the effects of climate change-driven events such as fires and storms.
"If you include the consequences of tropical storms...and you include the effects of fire events, those results [global GDP losses] will likely double – if not triple," said Kompas.
Kompas said these results should concern governments and direct their environmental policies.
"If you get losses in GDP of 6, 10, or 25%, what do you think happens to the tax base of governments?"
"It's the irony in all of this, governments will actually be under severe pressure when climate change starts to impact more heavily," said Kompas.