21st-Century Asia: Economic Implications of Climate Change Scenarios

Abstract

This paper presents a comprehensive forward-looking assessment of how climate change is likely to reshape economic growth trajectories across Asia throughout the twenty-first century. Leveraging historical estimates derived from a Pooled Mean GroupAutoregressive Distributed Lag (PMG-ARDL) model for 1971–2024, the study quantifies the long-run elasticity of GDP with respect to temperature and climate variability. These empirically derived parameters are integrated into probabilistic climate pathways from the Shared Socioeconomic Pathways (SSP1.9–SSP8.5), enabling a set of dynamic GDP simulations under alternative warming outcomes through 2100. The results demonstrate a pronounced divergence across scenarios: under the ambitious mitigation pathway (SSP1.9), Asia maintains robust economic expansion, achieving up to 40 percent higher GDP by the century’s end relative to business-as-usual expectations. In contrast, the severe warming scenario (SSP8.5) produces substantial macroeconomic deterioration, with cumulative output losses reaching approximately 74 percent due to heightened heat stress, reduced labor productivity, climate-induced capital depreciation, and disruption of agricultural and industrial supply chains. These projections reveal that climate change is not only an environmental threat but a decisive structural determinant of Asia’s long-run development prospects. The paper concludes by outlining the economic rationale for accelerated decarbonization, climate-resilient infrastructure investment, and adaptive governance reforms as essential pathways to safeguarding sustainable and inclusive growth under intensifying climate uncertainty.