Climate change could already be costing NSW billions: new report
Research commissioned from UNSW suggests climate change was reducing NSW economic output by an average of $21,288 per person in 2024.
New data modelling by UNSW Sydney’s Dr Timothy Neal – commissioned and released today by the NSW Net Zero Commission, opens in a new window – suggests just 1.2 degrees of global warming has already shaved between 4% and 33% off the state’s economic output.
“Most economic models of climate change look forward – towards potential impacts of different warming scenarios in 2050 or even 2100,” Dr Neal says.
“Instead, we used the same type of models to ask how much richer we would be today if the CO2 created by human activity didn’t make the planet warmer,” he says.
“In this way, we consider a hypothetical reality without anthropogenic warming.”
Dr Neal modelled real weather and temperature records from 1975 to 2024 across the world against economic growth.
He then compared the historical data with a “counterfactual” cooler world, where greenhouse gases from human activity did not drive climate change.
“There are still hot years and cold years, floods and droughts in our counterfactual climate,” says Dr Neal, who is a Scientia Senior Lecturer in the School of Economics and the UNSW Institute for Climate Risk & Response.
“What disappears in the counterfactual is the long, upward trend in temperature driven by greenhouse gases.”
He says this shows how a small difference in annual growth in our hotter reality can compound into large differences in living standards over time.
“The gap between the real economy and the hypothetical widens steadily from the mid-1990s,” he says.
By 2024, global warming had reduced NSW economic output by an average 18.1%.
That is equivalent to $21,288 per person in lost annual economic output across the state.
“There is considerable uncertainty in the estimates across models, with losses between 4% at the low end and 33% at the upper end of current state output,” Dr Neal says.
“But even the lower-bound estimate of 4% represents meaningful loss in economic output each year.
“We don’t get to observe the world without anthropogenic warming – but the best guess from the data we have is that we would be meaningfully richer today if it didn’t exist.”