15 May 2020, 14:20
Edgar Meza

German economy at risk from climate change impacts abroad - study

Clean Energy Wire

The effects of climate change outside of Europe pose a much larger risk to Germany's economy than its impacts within Europe because of international trade networks, says a report by the German Environment Agency (UBA). The study, whose findings are in line with similar reports for the United Kingdom and Switzerland, concludes that the “effects of foreign trade alone are at least as significant as the economic consequences of climate change within national borders,” because direct climate change affects EU regions less than other parts of the world. Germany therefore stands to suffer indirectly from the impact of climate change on countries outside the EU, according to the study.

Countries and regions such as China, India, South and Southeast Asia, the Middle East and Africa are expected to see significant losses in welfare and gross domestic product (GDP) as a direct result of the impact of climate change on labour productivity, agricultural yields and sea levels. “The purchasing power of the countries in these regions drops significantly compared to the reference trend without climate change, with considerable indirect negative consequences for Germany as a trading partner,” the study states.

The researchers note, however, that the transnational effects of global climate change cannot simply be cushioned by a general reduction in international trade relations. Such a move could not only lead to significant losses in prosperity in Germany, but also to a disruption in the worldwide production of goods and services and “networking that is central to the social and political stability of the world”, the researchers point out. Instead, the study recommends that the resilience of the German economy “be improved through greater diversification or restructuring of global trade relations. This must be accompanied by targeted support for adaptation measures in the severely affected regions of the world, which are important for Germany in terms of supply and sales markets and are difficult to substitute”.

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