The consequences of climate change, such as increasing weather extremes, are hitting already ailing economies particularly hard. This is the result of a study published on Wednesday by the Potsdam Institute for Climate Impact Research (PIK). The climate consequences are having a particularly strong impact in places where the corona pandemic had already led to massive economic losses.
According to the study, a global economic crisis, such as during the Covid-19 pandemic, increases the price pressure that private households experience from the effects of extreme weather events such as heat waves, floods or tropical cyclones. During the Corona period, price pressure tripled in China, doubled in the USA and increased by a third in the EU.
Extreme weather "puts additional pressure on already stressed societies," said study lead author Robin Middelanis. "In the event of a single climate catastrophe, local production losses can be flexibly compensated to a certain extent by unaffected production sites in the economic network." Such balancing mechanisms would become more difficult "when the global economy as a whole is under pressure," Middelanis pointed out.
For their study, which is published in the journal Environmental Research Letters, the research team analyzed two scenarios: a "stressed" economy and a "non-stressed" economy operating at full capacity. In both scenarios, the researchers simulated the indirect effects of local economic shocks caused by climate extremes such as heat stress, floods and tropical cyclones.
"It is as easy as it is dangerous to underestimate the economic impact of intensifying weather extremes," warned Anders Levermann, head of the Complexity Research department at PIK. "As these are amplified under climate change, they will coincide more frequently with other economic crises and that is dangerous," he pointed out.
According to the study, it is therefore also important to increase the resilience of transport and trade routes in order to adapt to the consequences of climate change. This makes it easier to absorb shocks that have hit other areas.