Climate change could cost Italy over 5% of GDP in 2050, budget watchdog says

Extreme weather due to climate change may cost Italy more than 5% of GDP in 2050, the country's budget watchdog said on Wednesday, adding that global action to reduce carbon emissions could significantly reduce the impact. In recent years, floods have devastated cities across Italy killing dozens of people and causing billions of euros in damage, as severe droughts damaged crops and livestock particularly in the less developed southern regions.

Italy has also recorded the European heat record of 48.8 degrees, registered in Sicily in 2021. "The impact on public finances of extreme events in Italy would increase from an estimated annual value of 0.2% of GDP in 2024 to 5.1% in 2050 in the unchanged policy scenario," the UPB watchdog said in its annual report.

It added that this would decrease to 0.9% if global carbon-neutrality targets were met. Achieving carbon neutrality means reaching a zero balance between CO2 emissions and CO2 absorbed from the atmosphere. Under a plan agreed in 2019, the European Union aims to become carbon neutral by 2050.

"The projections assume that the number of extreme events in 2050 will be six times greater than in 2024 in an unchanged policy scenario and two times greater in the carbon-neutral scenario," the UPB said. The independent watchdog said climate-related burdens on state finances included subsidies for the transition to less polluting energy sources.

Presenting the document, UPB President Lilia Cavallari said the "fragile international environment" makes it more difficult to find shared solutions on major issues, including climate change. "The urgency of coordinating climate change mitigation actions by involving as many actors as possible remains pressing. In this field, isolated measures risk being ineffective as well as more costly," Cavallari said.

Since returning to power in January, U.S. President Donald Trump has led a pushback against largely Democratic-led policies to curb carbon emissions.

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