Economists label climate change biggest threat to global economy
Climate change has been labelled as the biggest potential threat to the global economy in 2016, seen as more severe than weapons of mass destruction, cyber-crimes and mass involuntary migration, according to experts surveyed by the World Economic Forum (WEF).
The 2016 Global Risks report - produced by WEF in collaboration with risk specialists Marsh & McLennan and Zurich Insurance Group – provides an in-depth survey of 750 expert economists.
The 2016 edition marks the first time in its 11 year lifespan that the report has been topped by an environmental issue.
Cecilia Reyes, Zurich’s chief risk officer, said: “Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks.
“Meanwhile, geopolitical instability is exposing businesses to cancelled projects, revoked licences, interrupted production, damaged assets and restricted movement of funds across borders.
"These political conflicts are in turn making the challenge of climate change all the more insurmountable – reducing the potential for political cooperation, as well as diverting resource, innovation and time away from climate change resilience and prevention.”
The survey asked respondents to consider and rank 29 global risks across societal, technological, economic, environmental and geopolitical categories over a 10 year horizon to establish the likelihood and impact of each.
After appearing in the top five for the last three editions the failure of climate change mitigation and adaptation has moved to the top, despite the recent legally-binding deal established in Paris. Climate change issues outgunned WMDs, which ranked 2nd, water crises which ranked 3rd and involuntary migration and sever energy price shock which rounded out the top five.
Froma business perspective, energy price shocks ranked alongside unemployment issues as the top risk across half of the 140 established economies. This trend was apparent in Europe and the US, South Asia, North Africa and the Middle East.
Friends of the Earth’s senior energy campaigner Simon Bullock said: “The World Economic Forum is right to be concerned; climate change poses a huge threat to our security and well-being.
“Thousands of households and businesses across the UK have already been devastated by horrendous flooding this year. Experts warn that extreme weather like this will become more frequent and severe as climate change takes hold.
“World leaders must wake up to the growing clamour for rapid action to slash emissions. If David Cameron’s Government is serious about pursuing the “highest possible ambition” on climate change, its plans to get Britain off its fossil fuel dependency must be urgently updated.”
The report also highlighted the intertwining aspects that each category had with one another and the knock-on effects that this creates. For example, income disparity was suggested as a concern in tackling climate change due to the limited combating movement that it creates.
Involuntary migration is also creating a knock-on effect for climate change. Chatham House recently reported that energy consumption in refugee camps had been neglected by international governments and humanitarian agencies, costing an estimated $2bn annually.