Climate change threatens Germany's prosperity: Action is needed now!

Climate change threatens Germany's prosperity: Action is needed now!

Germany is considered a rich country and is often seen as resilient to the consequences of climate change. However, climate change is already raising serious questions about the stability of the German export economy. How Time reports, the Federal Republic suffered over 35 billion euros in damage from extreme weather events in 2018 and 2019. The flood disaster in 2021 placed a significant burden on the balance sheet with a further 40 billion euros in damage. Given these high costs, it is uncertain whether the state and society will have enough financial resources available to meet the challenges posed by climate change by the middle of the century.

Calculations suggest that climate-related damage could cost up to 20 percent of global economic output by 2050. A loss of around 11 percent of economic output is forecast for Germany. The threats to the prosperity and security of the population are diverse and include extreme heat, low water levels, damaged infrastructure and unproductive working days. Industry in particular is under pressure when rivers like the Rhine overheat or dry out.

Global challenges and their effects

Global crises, such as the recent coronavirus pandemic, have highlighted the vulnerability of a highly interconnected global economy. This is particularly evident in the weakening of supply chains, which have become even more vulnerable due to climate conditions. The Federal Environment Agency emphasizes that climate change represents a global challenge that is reflected in more frequent and more intense extreme weather events Federal Environment Agency.

Previous consideration of climate impacts was mostly limited to national aspects without taking deep global interactions into account. Germany, as strongly integrated into the global economy, is particularly vulnerable to the effects of climate change from other regions. The “ImpactChain” research project, which was carried out on behalf of the Federal Environment Agency, analyzed the effects of climate change on the German economy and identified relevant channels of influence.

Effects and recommendations for action

The results show that the risks to German imports from climate change are greater than to exports. Around 6 percent of German imports and 4 percent of exports come from climate-vulnerable countries. These models make it clear that climate-related disruptions can primarily affect agriculture and freight transport. Storms, floods and extreme heat have the potential to damage manufacturing facilities in these regions.

Given these challenges, the export economy could experience dampened growth opportunities due to global climate change. At the same time, there is an opportunity for Germany to benefit from new markets in the area of ​​climate adaptation and climate-friendly products. A key to strengthening the resilience of the German economy lies in diversifying trade relationships. It is recommended to reduce dependencies on climate-vulnerable countries and strengthen trade links with regions that are less affected by transnational effects.

Overall, the situation shows that a general reduction in international trade relations could lead to significant losses in prosperity. Instead, adaptation measures should be promoted in severely affected countries and regional trade should be expanded at the same time in order to prepare the German economy for future challenges.