The 700-page report, written by former World Bank chief economist Nicholas Stern, said hundreds of millions of people could suffer from hunger, water shortages and coastal flooding as the Earth gets warmer, reported the UK newspaper The Times.
Stern said the cost of addressing global warming comes to about 1 percent of the global GDP.
"That is manageable. We can grow and be green," Stern said, according to The Times.
If nothing is done to address global warming, however, the eventual cost could be a minimum of 5 percent of GDP or rise to 20 percent, he added.
The report says if temperatures rise by 3 degrees Celsius, rising sea levels and flooding could displace 200 million people. If temperatures rise by 2 degrees Celsius, 15 percent to 40 percent of species could face extinction, according to the report.
The report was commissioned by British Chancellor Gordon Brown, who also said that former U.S. Vice President Al Gore will serve as an adviser to the government on climate change.
Gore has been leading a campaign aimed at raising awareness about global warming since losing the presidential election in 2000.
Brown rolled out a set of proposals for a European-wide target of reducing emissions by 30 percent by 2020 and 60 percent by 2050, which he said he hoped would be adopted worldwide, The Times said.
President Bush kept the United States out of the Kyoto international treaty to reduce greenhouse gases, which cause global warming, in part because of the economic impact it would have on U.S. businesses, which are competing with countries that haven't signed the treaty either.
Under the 1997 treaty, 35 industrialized nations have committed to cutting greenhouse gases by an average 5 percent below 1990 levels by 2012.
Britain is considering implementing "green taxes" on cheap airline flights, fuel and high-emission vehicles, reported the Associated Press.
