Economy can’t keep up with climate change

Researchers from the Potsdam Institute for Climate Impact Research have concluded that economic growth will not be able to counterbalance the rising costs of climate change damages such as hurricanes.

More than 50 per cent of all weather-related economic losses worldwide are caused by damages due to tropical cyclones and hurricanes. With extreme weather expected to increase due to climate change, those losses are also set to rise.

Researchers from the Potsdam Institute for Climate Impact Research (PIK) in Germany set out to determine if economic growth can keep pace with the future hurricane losses.

Using data from the United States – including the effects of Hurricane Katrina in 2005 and Hurricane Sandy in 2012, both of which hit highly populated regions and resulted in tremendous damages – they determined that financial losses per hurricane could triple by the end of the century in unmitigated climate change. Annual losses on average could rise by a factor of eight.

The researchers concluded that even in the face of higher national incomes, economic growth will not be able to counterbalance the increase in damage.

“So far, historical losses due to tropical cyclones have been found to increase less than linearly with a nation’s affected gross domestic product,” said Tobias Geiger, one of the PIK researchers. “However, if you analyse losses with respect to per capita income and population growth separately, this reveals a different picture.”

According to his colleague Anders Levermann, adaptation to global warming will play an increasingly more important role, but “climate mitigation remains of vital relevance to prevent or damp still avoidable consequences”.

 

Image credit: Munich Re Group

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