A study published on Tuesday said that Cyprus’ economy will suffer from the effects of climate change. According to forecasts, if no measures are taken, by 2050 the gross domestic product of the island will decrease by as much as 29 billion euros.
A study conducted by the University of Cyprus Center for Economic Research (UCy) assessed the “macroeconomic impact of physical and transitional climate change risks on the economy of Cyprus.”
It examined how climate change affects the economy, with an emphasis on the physical risks associated with rising temperatures and environmental degradation.
Using a model developed by UCy, the researchers linked emissions, temperature, productivity, and industry activity across the energy sector and the climate module.
Climate change appears to be creating a productivity shock that spreads through supply chains, household demand, and fiscal channels.
The experts analyzed three scenarios developed by the Intergovernmental Panel on Climate Change: the business-as-usual scenario, the middle-of-the-road scenario, and the sustainability scenario.
The results showed significant long-term declines in GDP, investment, and consumption. The cumulative discounted GDP losses under the inertia scenario will reach about 29 billion euros by 2050 and 162 billion euros by 2100, while under the sustainable development scenario the losses will amount to 4 billion euros by 2100 and 23 billion euros by 2100.
Tourism, financial services and agriculture will be particularly affected, which will have a major impact on the foreign trade balance and tax revenues, for example, VAT losses from tourism.
Under the inertia scenario, tourism could lose approximately 3.8 billion euros by 2050; under the average scenario, losses would amount to 2.4 billion euros; and under the sustainable development scenario, losses would be limited to 500 million euros.
In the financial services sector, losses under the three relevant scenarios will amount to 2.3 billion euros, 1.5 billion euros and 300 million euros.
In agriculture, GDP loss is projected in the amount of 500 million euros, 250 million euros and 60 million euros under the corresponding scenarios.
The study says that timely mitigation measures — provided they are well thought out — can significantly limit GDP losses both in general and in individual sectors.
The air transport sector was the source of the largest multiplier of greenhouse gas emissions, while electricity generation was the largest source of sulfur oxide emissions.
“Given that Cyprus must reduce sulfur oxide emissions by 45 percent between 2020 and 2029, decarbonization in this sector is a priority,” the authors emphasized.
The study calls for further measures to decarbonize electricity production, for example by expanding the use of renewable energy sources and importing natural gas.
https://russiancyprus.news/news/society/climate-change-a-threat-to-cyprus-economy/
