Inaction on climate change already costs the world economy 1.6 per cent of global GDP - approximately $1tr a year - and cost are likely to double to 3.6 per cent of GDP by 2030 if governments and businesses fail to take urgent action, an NGO has warned.

Madrid-based DARA yesterday released a report commissioned by 20 governments that attempts to calculate the economic damage that will be caused through to 2030 by escalating temperatures, rising sea levels and carbon-related pollution.

Entitled A Guide to the Cold Calculus of A Hot Planet, the report concludes decisions taken on cold monetary terms alone would favour strong action on climate change globally and regionally.

It says without action to tackle climate change major economies will be severely hit and in less than 20 years China will suffer losses of over $1.2tr in foregone prosperity, while the US economy will be held back by more than two per cent of GDP and India by over five per cent of its GDP.

Less developed countries are forecast to experience even steeper losses of 11 per cent of GDP on average.

DARA also expects the human cost to worsen from the current level of around five million deaths each year, approximately 4.5 million of which are due to air pollution and the rest of which are attributed to hunger and communicable diseases aggravated by climate change.

These projected economic losses dwarf the modest costs associated with tackling climate change, with the report arguing that investing just 0.5 per cent of global GDP over the next decade in clean technologies would ensure sufficient emissions reductions to prevent the world passing the scientifically-agreed tipping point of a two degree average temperature rise.

However, the cost of supporting vulnerable populations in developing countries is placed at $150bn a year, significantly higher than the $100bn a year countries pledged to provide from 2020 at the Copenhagen climate summit in 2009.

Bangladeshi Prime Minister Sheikh Hasina said even a one degree Celsius rise would likely result in a 10 per cent loss in farming productivity for the country and a two per cent loss of GDP.

“Adding up the damages to property and other losses, we are faced with a total loss of about three to four per cent of GDP,” she continued. “Without these losses, we could have easily secured much higher growth.”

Hasina said the report represents “a milestone” for international climate negotiations, which will resume in Doha in December to attempt to thrash out new national carbon cutting targets.

However, talks have remained deadlocked with influential countries opposed over the future of the existing Kyoto Protocol, the structure of any future treaty, and the extent to which industrialised nations should provide climate funding to developing countries.

José María Figueres, former President of Costa Rica and a DARA Trustee, urged governments to redouble efforts to drive investment in tackling climate change or risk destabilising the global economy.

“1.3 billion people are still fighting their way out of the most extreme forms of poverty while major economies are today fighting their way out of crippling financial and economic crises,” he said. “We simply cannot afford to part with more growth.

“Governments and international policy makers must act decisively to combat the spiralling costs to national and global GDP resulting from inaction on climate change. With the investment required to solve climate change already far below the estimated costs of inaction, no doubt remains as to the path worth taking.”