Climate Change and its Economic Impacts in Mexico
Authors: Ulises Ramírez-Sánchez Hermes , Jessica Badillo-Camacho , E. García-Guadalupe Mario , H. Ulloa-Godínez Héctor 
Published: November 2024

Introduction: Climate change is one of the great challenges of the 21st century, due to its global causes and consequences and its heterogeneous and asymmetric regional impacts, with those who contribute the least to the phenomenon receiving the greatest negative impacts. Mexico has a minor contribution to climate change in terms of greenhouse gas emissions; however, it is highly vulnerable to its negative effects. Climate change is a long-term global phenomenon, with a high level of uncertainty. The economic analysis of climate change has a high level of risk, which makes it a process where risk must be managed. Despite these characteristics and limitations, it is a fundamental instrument for public policy and society since it identifies options and alternatives to build sustainable development strategies and protect natural resources and ecosystems for future generations beyond their economic value. However, it must be understood that projections are not one-off forecasts but only prospective scenarios.
Objective: The objective of this study is to evaluate the economic impacts of Climate Change for Mexico during this century, according to the different scenarios of the IPCC AR6.
Methodology: The methodology consists of presenting a set of regional projections of climate variables under the IPCC's AR6 climate change scenarios, and estimating the possible impacts of climate change on Mexico's economic sector.
Results: Regional models show temperature increases between 0.5 and 5 °C, while changes in precipitation will range between -20.3% and 13.5%. Low soil moisture, negative changes in vegetation (NDVI) and drought (SPEI12) will lead to soil moisture deficits, water stress, sparse vegetation and semi-permanent drought. The entire country is expected to be subjected to moderate (Central and Southern) to extremely severe (Northern) droughts that will worsen by the end of the century. Climate change will have effects on crop yields, livestock reproduction, production of meat and its derivatives throughout the country in a differentiated way, with increases in food prices. It will also cause a deficit of land suitable for agricultural activities; and water availability. Diseases associated with climate change will become more acute by the end of the century, with increases in health spending. It is estimated that the investment of the Gross Domestic Product (GDP) in the health sector would go from 6.25% to more than 18%, which could be unfeasible for the national economy. Based on the likely temperatures by the end of the century, it is estimated that the risk of extinction of species will range between 3 and 48% in terrestrial, oceanic and coastal ecosystems, the risk of biodiversity loss will go from moderate to very high. The total costs of climate change reach 2050, with a discount rate of 4%, values that range between 9 and 13% of GDP in the most likely scenarios for the end of the century and reach between 28 and 36% of GDP at a discount rate of 0.5%, while by 2100 with a discount rate of 4%.  around 16.5% of GDP and reach maximums between 69 and 76% of GDP at a discount rate of 0.5%.
Conclusion: The results allow us to conclude that climate change has significant impacts on the Mexican economy and that the costs of inaction are higher. Thus, it is more efficient to act now than to leave the problem to future generations, beyond the ethical considerations that it implies.