Climate change triggers supply-chain losses that substantially exceed direct damages

Climate change triggers supply-chain losses that substantially exceed direct damages | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Social Sciences - Article Climate change triggers supply-chain losses that substantially exceed direct damages Manfred Lenzen, Mengyu LI This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7012657/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Climate change is already disrupting economies worldwide, yet most estimates of its cost focus narrowly on direct local damages such as heatwaves and floods, thereby underestimating the full scale of global losses, by neglecting indirect effects that ripple through global supply chains. Using a multi-region input-output framework and production flexibility data, we present the first comprehensive global assessment of the indirect costs of climate-induced economic disruption cascading across regions and sectors. Here we utilise detailed long-term production flexibility data to show conclusively that i) these indirect costs substantially exceed the costs of the immediate damages by up to 5 times, ii) production recipe flexibility critically determines the magnitude of total losses, and iii) that economic costs of climate change impacts are likely below 5% of world GDP for warming of up to 3°C, but can reach 15% of world GDP for warming exceeding 4°C. Our second key result demonstrates the utility of input–output models for climate risk assessments and policy responses that account for indirect, cross-border effects. Our study expands on prior work by revealing not only a more comprehensive scale of potential losses but also the value of building flexibility and resilience into the global economy. Earth and environmental sciences/Environmental social sciences Earth and environmental sciences/Environmental social sciences/Climate-change impacts climate change impacts production disruption supply chains Full Text Additional Declarations There is NO Competing Interest. Supplementary Files LiXLenzenEconomicClimateCostSI.docx Supplementary Information Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7012657","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Social Sciences - Article","associatedPublications":[],"authors":[{"id":480145481,"identity":"439e7165-01cc-475b-8b65-4cb64b7c6fe7","order_by":0,"name":"Manfred Lenzen","email":"data:image/png;base64,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","orcid":"https://orcid.org/0000-0002-0828-5288","institution":"University of Sydney","correspondingAuthor":true,"prefix":"","firstName":"Manfred","middleName":"","lastName":"Lenzen","suffix":""},{"id":480145482,"identity":"24696308-7282-4bb8-8f2b-778054614c8f","order_by":1,"name":"Mengyu LI","email":"","orcid":"https://orcid.org/0000-0002-6791-1170","institution":"The University of Sydney","correspondingAuthor":false,"prefix":"","firstName":"Mengyu","middleName":"","lastName":"LI","suffix":""}],"badges":[],"createdAt":"2025-06-30 16:21:37","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-7012657/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7012657/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":90953717,"identity":"59e0ab71-da09-46f7-a360-2ad58d59818e","added_by":"auto","created_at":"2025-09-10 01:53:40","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1028349,"visible":true,"origin":"","legend":"","description":"","filename":"LiXLenzenEconomicClimateCost.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7012657/v1_covered_7d5b0362-0428-4a87-9ced-4c44d80a8c32.pdf"},{"id":86848523,"identity":"fe7e7f4c-fb5d-420e-874c-e076108bc6dc","added_by":"auto","created_at":"2025-07-16 09:19:30","extension":"docx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":22061755,"visible":true,"origin":"","legend":"Supplementary Information","description":"","filename":"LiXLenzenEconomicClimateCostSI.docx","url":"https://assets-eu.researchsquare.com/files/rs-7012657/v1/5d945305825268801903097f.docx"}],"financialInterests":"There is \u003cb\u003eNO\u003c/b\u003e Competing Interest.","formattedTitle":"Climate change triggers supply-chain losses that substantially exceed direct damages","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"climate change impacts, production disruption, supply chains","lastPublishedDoi":"10.21203/rs.3.rs-7012657/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7012657/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"Climate change is already disrupting economies worldwide, yet most estimates of its cost focus narrowly on direct local damages such as heatwaves and floods, thereby underestimating the full scale of global losses, by neglecting indirect effects that ripple through global supply chains. 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