Middle East and African economies have most to gain if world goes green, study finds

University of Cambridge says adapting to hotter weather will be key for region's GDP

People cool off in the water near the port of Basra during a heatwave in Iraq, one of the countries that could face an economic hit due to climate change. AFP

Victory in the fight against climate change would give the Middle East and Africa the biggest economic boost, a new study finds.

By the same token, however, some Middle East economies would be hit especially hard if global warming gets out of control.

In the most extreme case, a typical economy in the region would be more than 20 per cent smaller by 2100 than if emissions are reined in.

And the 174-country University of Cambridge research shows how vital it will be for the region to adapt to more extreme weather.

In a worst-case scenario for CO2 emissions, more resilience could be the difference between an economic hit of less than 1 per cent and about 10 per cent per year in several Middle East countries by 2050.

The UAE is among the Middle East countries that have the most to gain from an adaptation push, figures from the study analysed by The National show.

Scientists warn that people’s ability to withstand extreme heat could be pushed to its limit in hot countries, which are also vulnerable to drought.

Issues of particular concern in the Middle East include lack of water, pressure on food supplies, reduced seawater quality and worsening heat stress, diseases and allergies – all of which can damage the economy.

Last year’s Cop28 summit in Dubai ended with agreements to slash global CO2 emissions and focus resilience efforts on water, food, health, ecosystems, infrastructure, poverty and cultural heritage.

“No country is immune from the impact of climate change if greenhouse gas emissions are not curtailed,” said Kamiar Mohaddes of Cambridge Judge Business School, a co-author of the new study.

“Countries situated in hotter climates and those classified as low income likely face disproportionately higher income losses. However, countries in colder climates are not spared from the effects of climate change.

“Our findings emphasise the importance of climate change mitigation and adaptation policies to minimise these negative income effects.”

Best and worst cases

The study looks at several scenarios, ranging from a continued rise in fossil fuel use to a world where global warming is kept to 1.5°C, the goal of the Paris Agreement.

In that best-case scenario, most countries are better off by 2050 than if the trends of the past half-century continue, but the gains are not evenly spread.

The average African country has an extra 0.31 per cent of GDP per year, with Middle East countries gaining 0.27 per cent – figures worth many billions of dollars. The rest of the world sees smaller gains.

However, in a worst-case climate scenario, an annual hit of 8.1 per cent to Middle East economies is outweighed only by losses in North America.

The worst case assumes, however, that countries move slowly to prepare for hotter weather. In that event the world's economy could shrink by 24 per cent by 2100.

In a world of "faster adaptation", those losses are drastically reduced.

An annual GDP loss of 9.6 per cent per year in the UAE would be cut to 0.3 per cent, with similar potential savings in Saudi Arabia and Oman.

The UAE's adaptation plan includes policies to expand the country's mangroves, which act as both natural flood defences and carbon sinks.

As global warming accelerates, its impact on the economy “will be more detrimental than in the past” unless countries act quickly, the study's authors from Cambridge and the International Monetary Fund warn.

“Our findings emphasise the importance of mitigating climate change and implementing adaptation measures to minimise these negative effects,” they say.

“However, even with adaptation policies, the long-term growth effects of climate change are likely to persist, particularly in countries with hotter climates and lower incomes.”

The study Rising Temperatures, Melting Incomes: Country-Specific Macroeconomic Effects of Climate Scenarios, by Kamiar Mohaddes and Mehdi Raissi, is published in the journal Cambridge Working Papers in Economics.