How China's Climate Change Woes Affect the U.S. Economy
German scientists have shown once again that climate change remains a global problem, with China’s climate impact, for instance, hurting the economy of the United States. Disastrous flooding – likely to increase as the world warms, and ever more water enters the atmosphere – in one country could reverberate in ways that could harm another nation’s economy.
More precisely, China alone could experience a total of $380bn in economic losses over the next 20 years: this adds up to about 5% of the nation’s annual economic output.
About $175 billion of total losses could be attributed to future climate change – and as these losses are passed down the global trade and supply network, the US and the European Union could be most affected.
If so, river flooding in China alone – aside from the ever-greater extremes of heat and windstorm that are predicted to arrive with higher temperatures – could bring US losses of up to $170 billion in the next 20 years.
“The EU will suffer less from indirect losses caused by climate-related flooding in China due to its even trade balance. They will suffer when flooded regions in China temporarily fail to deliver for instance parts that European companies need for their production, but on the other hand Europe will profit from filling climate-induced production gaps in China by exporting goods to Asia.
“This yields the European economy currently more climate-prepared for the future,” said Sven Norman Willner, of the Potsdam Institute for Climate Impact Research, who led the study.
“In contrast, the US imports much more from China than it exports to this country. This leaves the US more susceptible to climate-related risks of economic losses passed down along the global supply and trade chain.”
He and his co-authors report in the journal Nature Climate Change that they took a look at the economic challenge for the world as a whole in the limited case of river flooding: damage caused by human-induced climate change, as a consequence of the combustion of fossil fuels at a rate that has already begun to change the chemistry of the atmosphere, could become a significant factor in the global economy, and river flooding has always been a problem.
Heat rises by 1°C
But as temperatures rise – and they have already risen by a global average of about 1°C in the last century, as ever more greenhouse gases have reached the atmosphere – so does evaporation, and so does the capacity of the atmosphere to hold moisture, which must eventually fall as rain.
The researchers looked at projections of near-future flood hazards on a regional scale that humans could expect to see on the basis of greenhouse gases already emitted. They then incorporated what is already known about economic network response to river flooding and its effects, taking into account the dynamics of international trade.
In research of this kind, the Potsdam Institute has what racing tipsters call “form.” One of the researchers, Anders Levermann, has already warned that greenhouse gases are forcing up sea levels; that warming carries with it global economic threats; and that the numbers of humans at risk from the worst of the future floods are rising.
The news is not all bad: climate change could also bring more rain to the countries of the African Sahel, but the same changes could mean ever higher levels of hurricane damage in the US.
The latest study has its own complexities: much depends on the course of international trade and the capacity of those countries not flooded to make good the shortfalls that follow flood disasters in one river system. In essence, international relations and natural hazard vulnerabilities have become entangled.
The entanglement remains, even though America’s President Trump has imposed tariffs to protect US industry. Unless nations adapt further, climate change will accelerate flood losses worldwide by about 15%, to a global total of $600bn within the next two decades. China’s losses could increase by 82%. America will still feel the shock, the researchers say.
“We find that the intensification of the mutual trade relation with China leaves the EU better prepared against production losses in Asia than the US. The prospect that the US will be worse off can be traced back to the fact that it is importing more products from China than it is exporting,” said Professor Levermann.
“Interestingly, such an unbalanced trade relation might be an economic risk for the US when it comes to climate-related economic losses. In the end, Trump’s tariffs might impede climate-proofing the US economy.”
He went on: “Trump’s tariff sanctions are likely to leave the US economy even more vulnerable to climate change. As our study suggests, under climate change, the more reasonable strategy is a well-balanced economic connectivity, because it allows to compensate economic damages from unexpected weather events – of which we expect more in the future.”