The poorest people within countries will suffer the most severe economic impacts of climate change: globally, a 1% increase in income decreases the costs of climate damages by 0.4%. A new study, conducted by CMCC researchers, provides an in-depth view of the economic damages caused by climate change and inequalities in the distribution of impacts between and within countries. The results highlight the need to consider adaptation differences and distributive consequences in climate policies.

It is broadly recognised by the scientific community that climate change impacts societies and economies worldwide and that these negative effects will compound as the world continues to warm. In one of the first studies of its kind, new research takes this one step further by quantifying how climate change impacts vary across income groups within countries on a global scale.

The study introduces a new method to estimate the income elasticity of climate impacts, providing crucial input for climate policy analysis. It achieves this by combining multiple climate impact models with detailed income distribution data, that together offer a more comprehensive view of potential future inequalities.

Conducted entirely by a team of four CMCC researchers, the study reveals how the poorest individuals within countries are projected to suffer the most severe economic impacts of climate change.

“Our research reveals that climate change is not just a global issue, but a deeply local one too. We found that within each country, it’s often the poorest who are most vulnerable to climate impacts. This underscores the urgent need for climate policies that not only reduce emissions but also address these potential inequalities,” explains Johannes Emmerling, senior scientist at CMCC.

“Notably, we found that the potential large impact on GDP, confirmed also in other recent studies, amounts to almost zero on average for the richest 10% of people within countries. This is because insurance and different adaptation options are more readily available and accessible for richer households,” adds Emmerling.

Globally, the study shows how for every 1% increase in income, climate damages decrease by about 0.4% (i.e., an elasticity of 0.6), indicating that damages fall disproportionately on the poor. Furthermore, the vulnerability to rising temperatures tends to decrease along income deciles within countries and by 2100 climate change could increase the Gini index (a measure of inequality) by up to 6 points in some countries, particularly in Sub-Saharan Africa and the Middle East.

“It’s crucial that we consider adaptation gaps and distributional effects when designing climate adaptation and mitigation strategies,” concludes Francesco Granella, co-author of the study and postdoctoral researcher at CMCC.

For more information:

Martino Gilli, Matteo Calcaterra, Johannes Emmerling, Francesco Granella, Climate change impacts on the within-country income distributions, Journal of Environmental Economics and Management, Volume 127, 2024, 103012, ISSN 0095-0696, https://doi.org/10.1016/j.jeem.2024.103012.