A future of erratic weather, higher seas, and extreme heat could lead to an economic 'Great Dying' twice as severe as the Great Depression

• A new book by David Wallace-Wells, a national fellow at the New America foundation and a deputy editor at New York magazine, explores how the modern world could be transformed by severe climate change: not just sea levels and wildfires, but climate conflict, crop failure and new global-warming geopolitics.
• In the following adapted excerpt, Wallace-Wells suggests that the economic effects may be especially traumatic. Although some people see capitalism as the primary threat to the climate, capitalism may also be endangered by climate change.
• The book, called "The Uninhabitable Earth," was published Tuesday.

It has been a long, destabilizing decade since the financial crash of 2008. But just how destabilizing it was to the post-Cold War order of free markets and liberal internationalism has become especially clear in the last few years, as self-doubt started beaming out from the highest citadels of contemporary capitalism.

In 2016, the IMF published a self-scrutinizing paper called "Neoliberalism: Oversold?". The same year, Paul Romer, the chief economist of the World Bank, proposed that macroeconomics - the "science" of capitalism - was perhaps a fantasy field of study equivalent to string theory, which no longer had any legitimate claim to describing the workings of the real economy.

Romer won the Nobel Prize last year, and a couple months later, Oliver Blanchard, Romer's counterpart as the former chief economist of the IMF, asked, baldly, "What comes after capitalism?"

The question sounds enigmatic, but the answer may be simple: climate change.

Some on the left tend to think of untrammeled capitalism as the primary threat to the climate. The inverse is true as well: Capitalism is endangered by climate.

The most eye-opening research on the economics of warming has come from Solomon Hsiang, Marshall Burke, and Edward Miguel - professors of economics at Stanford and Berkeley. They offer a bleak analysis: In a country that's already warm, every degree Celsius of warming reduces growth, on average, by about one percentage point. That's an enormous number, considering we count growth in the low single digits as strong.

Compared to the trajectory of economic growth with no climate change, their average projection is for a 23% loss in per capita earning globally by the end of this century.

Beyond shaving off the meaningful margins of our economic growth, there's a more alarming possibility that, at least in parts of the globe, climate change will wipe out the very possibility of growth - and perhaps even cut into existing productivity. There is a 51% chance that climate change will reduce global output by more than 20% by 2100, this research suggests, compared to a world without warming. And there's a 12% chance that it lowers per capita GDP by 50% or more by then unless emissions decline. By comparison, estimates suggest the Great Depression dropped global GDP by about 15%, and the more recent Great Recession lowered it by about 2%.

Hsiang and his colleagues estimate a one-in-eight chance of an ongoing and irreversible effect on the economy by 2100 that is 25 times worse than the 2008 crash. Last year, another team of economists suggested that these could be dramatic underestimates.

The breakdown by country is perhaps even more alarming. Some northern countries stand to benefit from warmer temperatures: Canada, Russia, Scandinavia, Greenland. But in the mid-latitudes, the countries - the US and China - that produce the bulk of the world's economic activity would lose nearly half of their potential output. Closer to the equator, it's worse; the World Bank estimated last year that 800 million people living throughout South Asia could be dragged into extreme poverty by climate change just over the next decade. India alone, one study suggested, would shoulder more than a quarter of the economic suffering inflicted on the entire world by climate change by 2100.

We have gotten used to setbacks on our erratic march along the arc of economic history, but we know them as temporary and expect elastic recoveries. What climate change has in store is not a Great Recession or a Great Depression but, in economic terms, a Great Dying.

How could that come to be? There are many factors. There is the threat to agriculture if low yields put small farms, cooperatives, and even empires of agribusinesses underwater (to use the oddly apposite accountant's metaphor). And then there is the real flooding that 2.5 million American homes and businesses - representing more than $1 trillion in present-day value - will suffer chronically by 2100, according to a 2018 study by the Union of Concerned Scientists. In Miami Beach, 14% of real estate could be flooded by 2045. By that same year, the real-estate impact in New Jersey alone will be $27 billion.

Heat also poses a direct cost to growth. Some of these effects we can see already - for instance, the warping of train tracks or the grounding of flights due to high temperatures. From Montreal to Finland, heat waves have also necessitated the closure of power plants when cooling liquids have become too hot to do their job. And in India, 670 million lost power in 2012 when the country's grid was overwhelmed by farmers irrigating their fields without the help of the monsoon season, which never arrived.

Other, less obvious effects are also visible - for instance, productivity. The negative cognitive effects of direct heat are accumulating more research support by the day. Globally, warmer temperatures dampen worker productivity. The effects begin early in life - you can see measurable declines in a person's lifetime earnings for every day temperatures passed 90 degrees during the nine months before they were born. Heat hurts test-taking performance, as does pollution associated with global warming.

Hsiang, Burke and Miguel have identified an optimal annual average temperature for economic productivity: 13 degrees Celsius, which happens to be the historical median for the United States and several other of the world's biggest economies. Today, the US climate hovers around 13.4 degrees, which translates to about half a percentage point of GDP loss - though, like compound interest, the effects grow over time. As the planet warms, the country could see another full degree Celsius added to its average temperature, and therefore lose a full percentage point of GDP. Of course, as the country has warmed, some regions have seen their temperatures rise closer to the ideal. The greater San Francisco Bay area, for instance, is sitting pretty right now, at exactly 13 degrees.

Over the last several decades, the mainstream assumption about responses to climate change has been that actions are only tolerable if they're cost-free or serve as avenues of economic opportunity. But as the cost of green energy has fallen in recent years, the equation has flipped: We now know that it will be much more expensive to not act on climate than to take even the most aggressive action today.

In 2018, one paper calculated the global cost of a rapid energy transition by 2030 to be negative $26 trillion; in other words, rebuilding the energy infrastructure of the world would make us that much money, compared to a static system. On the emissions course we are currently on, the cost of climate impacts could top $550 trillion by the end of the century - nearly double all the wealth that exists in the world today.

Hsiang, Burke, and Miguel's estimate that there's a 12% chance the global economy could fall by 50% comes from the very high end of what's possible - a worst-case scenario for economic growth due to climate change. But last year, Burke published a paper with several colleagues exploring the growth consequences of some scenarios closer to our present predicament. In it, he considered a future in which the world limits warming to between 2.5 and 3 degrees Celsius of temperature rise. Relative to a world with no additional warming, Burke and his colleagues estimated, global per-capita economic output in that situation would get cut between 15% and 25% by the end of the century. Four degrees of warming, which is where we could be headed, would lead to a cut of 30% or more.

That is a trough twice as deep as the deprivations that scarred our grandparents in the 1930s. But you can only really call it a trough after you climb out of it and look back from a new peak. There may not be such relief from climate deprivation.

Can capitalism survive this? The question is a prism, spitting out different answers to different ranges of the political spectrum. To those on one end, global warming could cultivate emergent forms of eco-socialism, while to those on another, it could conceivably produce a collapse of faith in anything but the market.

Trade will surely endure, perhaps even thrive, as it did before capitalism. Rent-seeking, too, will continue. Depending on your ideological inclinations, you could even imagine a shift in the existing order that puts carbon budgets at the center of trade agreements, punishes poorly behaving petro-states with sanctions, and offers some reparations-like aid for the countries hit hardest by climate change - all without actually overturning the whole apple cart. But even relatively fractional adjustments to the west's basic orientation towards business and capitalism are likely to arrive like earthquakes.

"Someone once said that it is easier to imagine the end of the world than to imagine the end of capitalism," the literary critic Fredric Jameson has written. That someone might say today, "Why choose?"

The intimidating size and power of markets has long been a problem for those hoping to change things - it's a familiar idea to anyone who has ever listened to undergraduates debate about capitalism. But going forward, climate change will likely accelerate two trends already undermining the promise of growth: First, it will produce a global economic stagnation that will play, in some areas, like a breathtaking and permanent recession; and second, it will make even more evident the world's increasingly stark income inequality by punishing the poor much more dramatically than the rich.

In an economic future doubly mangled by those forces, the world's very wealthy will likely have much more to answer for.

The predictions of economic hardship, remember, are enormous: 20% of potential global GDP or more lost, under business-as-usual conditions by 2100 - an impact much bigger than the Great Depression. And it would not be temporary.

It is hard to imagine any system surviving that kind of decline perfectly intact, no matter how "big."