A new newsletter by the University of Cyprus’ Centre for Economic Research (CypERC) brings together a series of studies that, taken as a whole, send a clear message for Cyprus: climate risks are no longer an abstract environmental concern but a measurable macroeconomic threat — and policy design will play a decisive role in determining how costly the coming decades become.

The starkest figures come from a model-based assessment of climate change impacts that tests three scenarios widely used in climate economics and aligned with IPCC pathways.

Under a “business-as-usual” trajectory, cumulative discounted GDP losses are estimated to reach €29 billion by 2050 and €162 billion by 2100. Under a sustainability-oriented pathway, the losses are dramatically smaller — €4 billion by 2050 and €23 billion by 2100 — underlining what the authors describe as the value of early and well-designed mitigation policies.

The research also breaks down sector-level exposure, pointing to disproportionate damage in activities tied to climate-sensitive demand and productivity.

By 2050, under the business-as-usual scenario, tourism is projected to lose around €3.8 billion, compared with €2.4 billion under a “middle-of-the-road” scenario and about €0.5 billion under the sustainability pathway. Financial services are also shown to be vulnerable, with estimated losses of roughly €2.3 billion under business-as-usual by mid-century, compared with €1.5 billion under the middle scenario and €0.3 billion under the sustainability pathway. Agriculture is projected to shrink by about €0.5 billion under business-as-usual, with losses roughly halved under the middle scenario and limited to around €60 million under the sustainability pathway.

Beyond the damage estimates, the same analysis evaluates the effectiveness of fiscally neutral mitigation tools — sized at around 1% of GDP up to 2030 — including a carbon tax, public investment in clean-energy infrastructure, and subsidies for green-energy adoption. The conclusion is that policy can significantly narrow the gap between high-damage and lower-damage climate trajectories, improving resilience and reducing long-run losses if measures are implemented early and designed carefully.

A separate ERC study maps where pollution is generated across the economy using an environmental input–output framework for Cyprus and the EU-28 over the period 2010–2018. One of the headline findings is that air transport in Cyprus recorded the highest greenhouse-gas emissions multiplier in 2018, estimated at 3,129 tonnes per €1 million of output. This multiplier increased sharply — by 112% — between 2010 and 2018, signalling a worsening environmental footprint for the sector.

The study also identifies electricity generation as the largest producer of sulphur oxides (SOx), including both direct and indirect emissions, with a multiplier of 10.8 tonnes per €1 million of output. This finding is particularly relevant given Cyprus’ obligation to cut SOx emissions by 45% over the 2020–2029 period, reinforcing the need for further decarbonisation of power production.

By contrast, maritime transport shows the largest reductions in emissions multipliers across all pollutants during 2010–2018, indicating improved environmental efficiency, even as comparisons suggest that EU-28 shipping remains among the highest emitters for several pollutants.

Another theme running through the newsletter is that effective environmental policy is not only about taxes and technology, but also about how people make decisions in practice. A study grounded in behavioural science argues that Cyprus’ sustainability transition is constrained because greener options are often too expensive, inconvenient, or insufficiently supported by infrastructure. Examples include the high cost of electric vehicles, limited reliability of public transport in many areas, and weak repair and reuse pathways across the economy. The authors point to international experience where governments systematically apply behavioural insights to design more effective interventions, and note that Cyprus now has a growing academic base capable of supporting such approaches in public policy design.