The rapid pace of development and urbanization has exerted mounting pressure on natural resources and increased global warming by altering the planet’s radiative forcing, thereby intensifying the frequency and severity of climate-induced events. These events have caused significant socio-economic consequences. Several studies have indicated the immediate, direct economic consequences of climate risks; however, it is imperative to study the indirect and non-economic damages, including lives lost, biodiversity loss, and community displacements, as they also entail insurmountable economic losses. Subsequently, these losses and damages ultimately impede national output. This aggregate economic loss is commonly known as the economic impact of climate change (EICC). The study examined the economy-wide losses through marketable and non-marketable mechanisms and estimated the aggregated EICC at the national level. The analysis revealed that the country is most vulnerable to rainfall variability, followed by floods. Meanwhile, escalating climate risks adversely affect the outputs of electricity, water supply, and other utility sectors, closely followed by the service sector, which recorded a significant decline in output.
At the national level, the EICC was represented as 7.38 per cent of the GDP in 2022-23, underscoring the cost of inaction. This estimate captured annual adaptation-relevant damage costs as a share of GDP and projected them to reach 15.42 per cent in 2050, highlighting the financial resources required to mitigate future climate impacts. From a sectoral lens, Electricity, water supply, and other utility services emerged as the most vulnerable, with losses amounting to 3.49 per cent of GDP, followed by the service sector at 2.10 per cent of GDP. By 2050, these impacts are projected to intensify significantly, with the services sector’s losses rising to approximately 6 per cent of GDP, followed by agriculture and allied sectors at 5.25%. Heat stress emerged as a major climate stress with significant economic impacts. This paper underscores the need for urgent, targeted investments in climate-resilient infrastructure and sector-specific adaptation strategies to mitigate future impacts.
