According to a recent study, the risk of economic impacts from climate change is increasing rapidly for the wealthy due to its effects on global supply chains and goods and services, while the most vulnerable continue to be the poorest people worldwide.
In different countries, individuals with lower incomes are known to bear greater economic risks due to their limited ability to adapt to climate change.
The researchers explained that the disparity in consumption between various income brackets within a country is rooted in how easily one can substitute goods to adjust to the impacts of climate change, such as disruptions to supply chains.
A team from the Potsdam Institute for Climate Impact Research (PIK) in Germany discovered that individuals with lower incomes are more susceptible to supply disruptions because they allocate a larger portion of their budget to essential goods that are difficult to substitute.
Conversely, individuals with higher incomes allocate a larger portion of their budget to goods that are easier to substitute, resulting in smaller decreases in consumption, according to the researchers.
"While current risk levels are lowest for high-income consumers, climate-driven risk increases may be largest. This may reduce adaptation advantages of higher-income consumers and thus result in substantial macroeconomic risks," the authors wrote in the study published in the journal Nature Sustainability.
The researchers added that inequality in consumption across income groups could trigger market processes whereby higher-income consumers can afford higher prices for necessities, thereby inflating prices and pressuring lower-income groups.
For the study, the team looked at how erratic weather events, increasingly intensified by climate change, affected global production and consumption across different income groups in 264 regions. The researchers analysed province- or state-level data in countries like the US and China.
The results confirmed those from previous studies that the poorest people around the world bear the greatest economic risks from climate change, they said.
However, the risk for the wealthy is growing the fastest, they added.
"In the next 20 years, climate change will increase economic risks from erratic weather. The highest risks remain with the poorest around the world. But the increase of economic risk is strongest for the wealthy, in countries like the US and the European Union," corresponding author and PIK scientist, Anders Levermann, said.
The group also discovered that economies moving towards achieving net-zero carbon emissions, such as Brazil or China, are extremely susceptible and encounter the greatest risks because of the severe consequences of unpredictable weather and unfavourable trade impacts.
"Consumers all around the world, regardless of their income, will thus face increasing challenges due to global warming -- without a transition towards carbon neutrality we will eventually not be able to meet these challenges," Levermann said.
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