WASHINGTON — Falling crop yields, the spread of disease, rising sea levels will engulf coastal cities and rising temperatures are likely to significantly reduce global wealth by 2050, a major insurance company warned Thursday. He highlighted the consequences if the world does not urgently slow down its use of fossil fuels.
A report by Swiss Re, the world's largest provider of insurance to other insurers, says the impact of climate change will increase global economic output by 2050 compared to the level of growth in the absence of climate change. It is expected that this will reduce the cost of high-income buildings by 11-14%. This equates to a $23 trillion reduction in annual global economic output worldwide as a result of climate change.
In some Asian countries, wealth could be one-third lower than it would otherwise be, the company said. “Our analysis shows what economies could face if governments do not take more decisive action on climate change,” said Patrick Zahner, head of global macroeconomic forecasting at Swiss Re. “It shows the potential costs.”
The forecast came as world leaders gather in Washington on Thursday and Friday for a virtual climate summit hosted by President Biden, who has urged countries to do more to reduce greenhouse gas emissions. . Biden is expected to pledge to cut U.S. emissions by about half by 2030.
A new report reveals the stakes involved in those negotiations.
“For risks with moderate or high confidence that there is a direct link to global warming, such as heat waves, wildfires, droughts and torrential rains, “We are adjusting our pricing model.” .
The forecast could also affect investments by Swiss Re and other insurance companies, which collectively manage about $30 trillion in assets, Hegeli said.
According to Swiss Re, if countries succeed in limiting the rise in global average temperatures to below 2 degrees Celsius above pre-industrial levels, the 2015 Paris Agreement, an agreement between nations to combat climate change, will targets), the economic losses by mid-century will be modest. The company found that most countries' economies are no more than 5 percent smaller than they would otherwise be.
However, current emissions levels are far from meeting those goals. Based on the current trajectory, global temperatures could rise by up to 2.6 degrees Celsius by 2050, according to a report by Swiss Re.
The report estimates that the U.S. economy would be up to 7 percent smaller than it would be in a world without climate change. Other wealthy Western countries such as Canada, Britain and France could lose between 6% and 10% of their potential economic output.
The consequences will be far more dire for poorer countries, which tend to be exposed to warmer temperatures but are less able to adapt their infrastructure and economies in response.
Even if global temperature rise is limited to 2 degrees Celsius, Malaysia, the Philippines and Thailand will each grow 20% less than expected by 2050, Swiss Re estimates. If the temperature is 2.6 degrees, the wealth of each country will be reduced by one third compared to otherwise.
And that's not the worst case scenario. Swiss Re also modeled the economic impact of a 3.2 degree rise in temperature by 2050, which it described as a “severe case” of rising temperatures.
That would reduce wealth levels in Malaysia, the Philippines and Thailand by almost half compared to what they would be in a world without climate change. Indonesia's economy will shrink by 40 percent. The Indian one will be 35% smaller.
Insurers' increasing financial exposure to climate change is having an impact in already high-risk locations.
The US government introduced a new pricing structure for flood insurance this month, which means higher premiums for homes most vulnerable to flooding. In California, homeowners, especially in wildfire-prone areas, are increasingly having trouble getting insurance, prompting state officials to intervene.
The Biden administration is expected to issue an executive order directing insurance regulators to assess climate-related risks facing insurers.
Over the past 40 years, the United States has experienced nearly 300 weather- and climate-related disasters, each with losses exceeding $1 billion, said Donald L. Griffin, vice president of the Property Casualty Insurance Association of America, which represents insurance companies. He pointed out.
Last year alone, there were 22 such multibillion-dollar disasters.
He said if climate change continues unabated, there is a risk that premiums will become too high in at-risk areas. “We can't keep rebuilding the same way,” Griffin said. “That will bring down the price of the product.”
