Climate Change, Geopolitics and the Future Wealth of Nations

Alessio Terzi and Alexander Ramsay

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: As climate change intensifies, it is expected to affect countries across the globe in highly heterogeneous ways, depending on each nation's geographical location and level of development. Yet, most long-term economic projections do not take this factor explicitly into account. Could climate-induced weather events shape the relative wealth - and therefore geopolitical clout - of countries over the 21st century? In this paper, we present GDP projections for 164 countries between 2025 and 2100 under different SSP-RCP scenarios. Three fundamental conclusions emerge. First, under any climate scenario, the world is heading towards a multipolar equilibrium, with the US, China and Europe remaining the dominant economic blocs. India is on the rise, but is not currently expected to match the scale of these three by century's end. Second, the global concentration of GDP is projected to decline, indicating increasing potential for geopolitical fragmentation and a relative "rise of the Rest". Third, a scenario marked by heightened geopolitical rivalry would exacerbate climate damages and harm growth in all countries, but particularly so for emerging markets, making China's surpassing of the US even more unlikely. Despite the large direct nominal losses arising from climate change, our results suggest that its indirect effects—through slower productivity growth and demographic shifts-will be even more consequential in shaping the future wealth of nations.

Keywords: Climate Change; Geopolitics; Socio-Economic Pathways; Economic Growth; International Political Economy (search for similar items in EconPapers)
JEL-codes: F02 F52 O44 O47 Q56 (search for similar items in EconPapers)
Date: 2025-07-08
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:2548

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