Extreme weather events linked to climate change are set to increase.
(Photo by Gallo Images / Darren Stewart)
- According to a study by S&P Global, climate change could see a 4% loss in global annual GDP by 2050.
- Without new climate change policies, low-income countries could suffer 3.6 times more GDP loss than wealthier countries.
- Exposure to climate change and its costs are already on the rise.
According to estimates from a new study of 135 countries, climate change could see a 4% loss in global annual economic output by 2050 and affect many poorer parts of the world disproportionately.
Ratings firm S&P Global, which provides countries with credit scores based on the health of their economies, released a report on Tuesday examining the likely impact of sea level rise and more regular heat waves, droughts and storms. .
In a baseline scenario where governments largely avoid major new climate change policies – known as “RCP 4.5” by scientists – low- and middle-income countries are likely to experience gross domestic product losses on average 3, 6 times more than the richest ones.
Exposure of Bangladesh, India, Pakistan and Sri Lanka to fires, floods, severe storms and even water shortages means that South Asia has 10% -18% of GDP at risk, about three times that of the North America and 10 times more than the least affected region, Europe.
The regions of Central Asia, the Middle East and North Africa and Sub-Saharan Africa also face considerable losses. Countries in East Asia and the Pacific face similar exposure levels to sub-Saharan Africa, but mainly due to storms and floods rather than heatwaves and droughts.
“To varying degrees, this is a problem for the world,” said Roberto Sifon-Arevalo, S & P’s principal government credit analyst. “One thing that really comes up is the need for international support for many of these (poorer) parts of the world.”
Countries around the equator or small islands tend to be most at risk, while economies that are more dependent on sectors such as agriculture are likely to be more affected than those with large service sectors.
For most countries, the exposure and costs of climate change are already on the rise. Over the past 10 years, storms, fires and floods alone have caused losses of around 0.3% of GDP annually globally according to insurance company Swiss Re.
The World Meteorological Organization (WMO) also calculates that, on average, a weather, climate or water-related disaster has occurred somewhere in the world every day for the past 50 years, causing 115 daily deaths and over $ 202 million. of daily losses.
S & P’s Sifon-Arevalo said some countries have already experienced a credit rating downgrade due to extreme weather conditions, such as some Caribbean islands after major hurricanes.
But he said the new data would not fit into the firm’s sovereign rating models, as there was still too much uncertainty about how countries could adapt to the changes.
A study last year by a group of UK universities looking at a more extreme rise in global temperatures predicted that over 60 countries could see their ratings reduced due to global warming by 2030.
Some experts have even suggested a sliding scale for ratings, where highly exposed countries would have one credit score for the next 10 years or so and another for more in the future, when problems are likely to escalate.
“We strive to say what’s relevant and where,” Sifon-Arevalo said. “But we don’t evaluate a worst case scenario, we evaluate a base scenario.”