A new report by the Economist Intelliegence Unit is warning that by 2050 climate change could be costing the world economy as much as US$7.9 trillion as increased drought, flooding and crop failures hamper growth and threaten infrastructure.

The Economist Intelligence Unit’s (EIU) Climate Change Resilience Index has measured the preparedness of the world’s 82 largest economies and scored them on their ability and willingness to confront climate change. found that based on current trends, the fallout of warming temperatures would shave off 3 per cent of global gross domestic product by 2050.

The Climate Change Resilience Index rates countries on eight indicators that assess their capacity to withstand the impacts of higher temperatures and more extreme weather events.

The index, which makes it possible to assess country-specific economic impacts, suggests that the world will be poorer in 2050 due to the economic impacts of climate change.

The EIU’s results also point to the importance of institutional quality for minimising the impact of climate change. The research shows that while being rich is an advantage to tackle climate change, institutional quality also matters. Poor institutions, therefore, can simultaneously harm economic growth and exacerbate the negative impacts of climate change.

According to the new framework, the global economy will be 3% smaller in 2050 and regionally, Africa will be hardest hit by climate change impacts. Africa is the least resilient region (4.7% smaller), followed by Latin America (3.8%), the Middle East (3.7%), Eastern Europe (3%) and the Asia-Pacific (2.6%).

In terms of individual countries, the report suggests that Angola stands to lose the most -- as much as 6.1 per cent of gross domestic product. The study attributes this to a mixture of a lack of quality infrastructure, as well as its geographical exposure to severe drought, soil erosion and rising sea levels.

The regions which display the most resilience are North America (1.1% smaller) and Western Europe (1.7%) – they are likely to see the least impact economically because both regions are richer and more prepared to tackle climate change from an institutional standpoint.

John Ferguson, The EIU’s Country Analysis Director, commented:

“Our index reveals the vulnerabilities that exist in developing countries to the oncoming impacts of climate change. The impacts of climate change are already being felt – we are already seeing the effects of more extreme weather events –, but the economic impacts will only grow over time. It’s important to remember that a 3% loss of real GDP in 2050 is highly significant for the global economy, and that there will be economic losses in every year of the coming three decades.”

There is also uncertainty in forecasting the impacts of climate change. The EIU has assumed that countries make a modest effort to meet their goals as stated in their INDCs (the intended nationally determined contributions as set out for the Paris Climate Agreement).

However, the EIU said that progress in this space and the implementation of these policies could “easily disappoint” and that the economic impacts could in fact be much worse than those highlighted in The EIU’s model.