Global warming could cost over US$300 billion per year
Unless urgent efforts are made to mitigate the greenhouse effect, global warming could cost the world over US$300 billion every year, according to the United Nations Environment Programme (UNEP).
A report by insurers Munich Re, one of the world’s biggest re-insurance companies, which has been monitoring the cost of natural disasters since the 1960’s, indicates that an increase in tropical cyclones, loss of land from rising sea levels, and damage to fishing stocks, agriculture and water supplies could result in huge costs to countries around the world.
“There is reason to fear that climatic change will lead to natural catastrophes of hitherto unknown force and frequency,” said Dr Gerhard Berz, head of Munich Re’s Geoscience Research Group.
“Studies have indicated, disturbingly, that climatic changes could trigger world wide losses totalling many hundreds of billions of dollars per year,” he said. “Most countries can expect their losses to range from a few tenths of a per cent to a few per cent of their gross domestic product each year. And certain countries, especially small island states, could face losses far exceeding 10%.”
According to the report, the water industry world-wide will be facing US$47 billion of extra costs annually by 2050. Eco-system losses, including mangrove swamps, coral reefs and coastal lagoons which are vital nurseries for the fish relied on by many poor communities for protein, are predicted to run at over $70 billion by 2050. Agriculture and forestry could lose up to $42 billion world-wide as a result of droughts, floods and fires. There are also expected to be losses and additional costs in the construction, transport and tourism industries, though these have not yet been calculated.
Losses have been calculated per area, with Europe’s largest estimate of climate related losses of US$21.9 billion being due to higher death rates and poor health. In the United States the extra costs of health measures and more intensive water management may reach nearly US$30 billion a year by 2050. According to Dr Berz, it is vital for the insurance industry to adapt to these future risks by providing long term cover for natural hazards and by promoting action among nations to reduce the build up of greenhouse gases.
The UNEP intends to develop an early warning system and a vulnerability index in order to protect those at greatest risk, though stresses that such systems could take several years to produce.
“The time to act is now,” said Klaus Toepfer, Executive Director of the UNEP. “We must all work to reduce emissions of greenhouse gases. But mitigation is not enough. The world has already signed up to a certain level of human-induced climate change as a result of over a century of industrial emissions, primarily from the developed world.”
“We must help vulnerable areas of the world, primarily in the developing countries, to adapt to the consequences of global warming,” he added. “We have a moral responsibility to our fellow men and women to protect them and their families from food shortages to devastating floods.”
Combined with the recent scientific consensus that average temperatures across the world could climb by as much as 5.8°C over the coming century, the new estimates from the insurers serve to underline how imperative it is for governments to act to avert the forthcoming impacts, says Toepfer. It is crucial for countries to restart the climate change talks stalled in The Hague at the end of last year, he said.