Global greenhouse gas emissions and Canadian GDP
This report examines the long-term impact on the Canadian economy of changing weather patterns due to climate change.
Our analysis indicates that the 0.9-degree Celsius average increase in surface temperature and 2.5 per cent increase in average precipitation observed for Canada over 1981 to 2021 (relative to 1961-1990 reference levels), have lowered the level of Canadian real GDP in 2021 by 0.8 per cent (or $20 billion in 2021 dollars).
Under our benchmark global greenhouse gas emissions scenario in which countries across the world fully meet their climate commitments, we estimate that higher temperatures and precipitation will reduce Canada’s real GDP by 5.8 per cent in 2100, compared to a counterfactual scenario where climate variables remain at their average levels observed over 1961 to 1990. For perspective, in 2021, 5.8 per cent of GDP amounts to $145 billion (in 2021 dollars). In 2100, the economy will be substantially larger and therefore the estimated impact in dollar terms would be correspondingly larger.
We estimate that 2.4 percentage points of the 5.8 per cent impact in 2100 stems from the continuation of recent changes in weather patterns due to climate change while the remaining 3.6-percentage point impact is from future changes to weather patterns.
If instead global policies remain closer to current settings—and global climate commitments are not met—we estimate that the level of Canadian real GDP in 2100 would be approximately three-quarters of a percentage point lower compared to our benchmark global emissions scenario.
Our analysis shows that climate change has—and will continue—to negatively impact the Canadian economy. We estimate that recent increases in temperature and precipitation combined with future changes in weather patterns will reduce Canada’s real GDP by 5.8 per cent in 2100.
Our baseline climate scenario is predicated on countries following through on their global climate commitments. If climate polices remain closer to the status quo, the long-term impact of climate change on the Canadian economy will be larger.
Parliamentary Budget Officer