Climate change will inflict losses to the global economy worth an annual $38 trillion by 2049, as extreme weather ravages agricultural yields, harms labor productivity and destroys infrastructure, according to researchers at the Potsdam Institute for Climate Impact Research (PIK).

Planetary warming will result in an income reduction of 19 percent globally by mid-century, compared to a global economy without climate change, according to research published in Nature on Wednesday. The paper uses data from more than 1,600 regions worldwide over the past 40 years to assess future impacts of a warmer planet on economic growth.

“Climate change will cause massive economic damages within the next 25 years in almost all countries,” Leonie Wenz, the scientist at PIK who led the study, said in a statement. “We have to cut down our emissions drastically and immediately – if not, economic losses will become even bigger in the second half of the century, amounting to up to 60 percent on global average by 2100.”

Human-made greenhouse gas emissions have warmed the world about 1.1C on average since pre-industrial times, leading to extreme weather events that cost about $7 trillion over the past 30 years, according to Bloomberg Intelligence. Climate damages keep rising, averaging $500 billion a year — or 2 percent of the US GDP — since 2016. Developing nations that contributed less to global warming are bearing the brunt of losses and damages.

The researchers said cutting emissions and limiting global warming to 2C by the end of the century would be the most cost effective way to reduce further climate damages. “Protecting our climate is much cheaper than not doing so, and that is without even considering non-economic impacts such as loss of life or biodiversity,” Wenz said. “We will need more adaptation efforts if we want to avoid at least some of them.”

Countries least responsible for climate change are predicted to suffer an income loss 60 percent greater than the higher-income countries, and 40 percent greater than higher-emission countries, according to the report. They also have the least resources to adapt to current impacts.

But the economic losses of the warming will be felt everywhere and “also in highly developed ones such as Germany, France and the United States,” Wenz said. Only regions at very high latitudes will benefit from hotter temperatures.

The magnitude of the economic damages exceeds previous estimates because it takes into account not just temperature increases, but also additional climate variables like extreme rainfall and impacts of extreme weather events on agriculture and labor productivity, as well as human health.

“Structural change towards a renewable energy system is needed for our security and will save us money,” said Anders Levermann, a co-author of the study. “Staying on the path we are currently on will lead to catastrophic consequences.”

Photograph: A child inspects a large-scale projection of planet earth at the Museum of Natural Sciences of Barcelona, a designated climatic refuge, part of Barcelona’s Climate Shelter Network, where residents can take shelter during extreme heat.