View image in fullscreen Researchers say the underestimation of extreme weather events on the global economy has profound implications for climate policy. Experts say previous economic models underestimated impact of global heating – as well as likely ‘cascading supply chain disruptions’ Economic models have systematically underestimated how global heating will affect people’s wealth, according to a new study that finds 4C warming will make the average person 40% poorer – an almost four-fold increase on some estimates. The study, by Australian scientists, says average global GDP per person will be reduced by 16% even if warming is kept to 2C higher, , much higher than previous estimates of a drop of about 1.4%. Even if governments around the globe hit their near-term and long-term climate targets, scientists now estimate global temperatures will rise by 2.1C . Criticisms have mounted in recent years that a set of economic tools known as integrated assessment models (IAM) – used to guide how much governments should invest in cutting greenhouse gas emissions – have failed to capture major risks from climate change, particularly extreme weather events. The new study, in the journal Environmental Research Letters , took one of the most popular economic models and enhanced it with climate change forecasts to capture the impacts of extreme weather events across global supply chains. Dr Timothy Neal, of the University of New South Wales’s Institute for climate risk and response and the lead author of the study, said the new research had looked at the likely impact of global heating of 4C – seen by many climate experts as catastrophic for the planet – finding it would make the average person 40% poorer. This compared with about 11% poorer when using the models without enhancements. Previous economic models that “inadvertently concluded” even high levels […]