Climate change could cost Latin America 16% of GDP this century, says Moody's

Climate change could cost Latin America nearly a fifth of its gross domestic product (GDP) by the end of the century without new policies to curb its impact, according to a Moody's Analytics report published Monday.

The analysis examined three possible scenarios for the region, accounting for costs of climate change's physical toll - infrastructure damage, poorer health - as well the costs of policy interventions aimed at reducing climate change's impact.

If no new policy action is taken, Moody's foresees a steady deterioration in GDP, losing 10% by 2075 and ending the century down 16% as the region loses production capacity starting this year and losses mount at increasing rates.

The report called this a "nightmare scenario."

"Latin American countries that would be more affected by climate change are the main fossil fuel producers and consumers: Venezuela, Colombia, Brazil and Mexico," the report said.

Latin America's economic output sustained losses under all three scenarios analyzed: immediate policy actions targeting zero emissions by 2050, policies delayed until 2030 but then picking up pace, and no new policies to curb climate change.

"Early policy is the best-performing scenario as it reports the lowest losses," said Moody's, predicting higher inflation for the first 50 years with output losses falling below 4.5% and leveling down just 3.5% by 2100.

Under a late policy scenario, Moody's sees output sinking more than 6% lower before recovering to a loss of 5% by 2080.

Output losses would accelerate and worsen between 2030 and 2060 as decarbonization advances, it said, with much higher inflation from more intensive prices and tariffs.