LONDON (Reuters) – Worsening droughts, storms and heavy rains in some of the world’s largest economies could cost the global economy $5.6 trillion
, according to a report released Monday.
Heavy rains this year have sparked floods, inundated cities in China and South Korea, disrupted water and electricity supplies in India, and drought has put farmers’ harvests at risk across Europe.
Such disasters are costing economies hundreds of billions of dollars. Last year’s extreme droughts, floods and storms cost more than 224 $1 billion globally, according to the Emergencies Database maintained by the Brussels-based Centre for Disaster Epidemiology Research.
But those costs will soar as climate change exacerbates rainfall, floods and droughts in the coming decades, a report from engineering and environmental consultancy GHD warns.
Water—either too much or too little—can “be the most destructive force a community can experience,” said Don Holland, who oversees GHD’s Canada Water Market Program.
GHD assessed water risk in seven countries representing different economic and climatic conditions: United States, China, Canada, United Kingdom, Philippines, United Arab Emirates and Australia. Using global insurance data and scientific research on how extreme events affect different industries, the team estimated the amount of loss that countries face in terms of direct costs and the economy as a whole.
In the U.S. by 2050, the total losses in the states of the world’s largest economy could reach $3.7 trillion, before the U.S. GDP It will shrink by about 0.5% per year. By mid-century, China, the world’s second-largest economy, will face cumulative losses of about $1.1 trillion.
Of the five industries most important to the global economy, manufacturing and distribution will be hardest hit as water shortages disrupt production, while storms and floods damage infrastructure and inventories, causing 4.2 trillions of dollars in disaster losses.
Agriculture sector vulnerable to drought and extreme rainfall could lose $4.2 trillion 332 $1 billion in damages 2050 . Other industries facing significant challenges include retail, banking and energy.
At this year’s World Economic Forum in Davos, Switzerland, a global group of experts formed a new committee to study water economics Policymakers offer the following recommendations: Water management.
We must “together change the way we manage water and climate,” said Commission co-chair Tharman Shanmugaratnam. “The costs of doing so are not trivial, but they pale in comparison to the cost of wreaking havoc with extreme weather.”