Climate Change to Cost $300 Billion a Year

Insurance losses due to global warming could cost more than $300 billion a year in damages, according to a report prepared for the United Nations Environment Programme (UNEP).

NAIROBI, Kenya – Members of the agency’s Financial Services Initiative address the losses due to tropical cyclones, loss of land as a result of rising sea levels and damage to fishing stocks, agriculture and water supplies that are caused by the emission of carbon dioxide and the other greenhouse gases. In some low-lying states, such as Maldives, the Marshall Islands and Micronesia, losses linked with climate change could exceed 10 per cent of their national wealth by 2050. “The time to act is now; we must all work to reduce emissions of greenhouse gases,” says UNEP executive director Klaus Toepfer. “But mitigation is not enough; the world has already signed up to a certain level of human-induced climate change, as a result of over a century of industrial emissions, primarily from the developed world.” “We must help vulnerable areas of the world, primarily in the developing countries, to adapt to the consequences of global warming,” he adds. “We have a moral responsibility to our fellow men and women to protect them and their families from food shortages to devastating floods.” The report was presented before UNEP’s Governing Council met in Nairobi. The Intergovernmental Panel on Climate Change (IPCC), which is jointly sponsored by UNEP and the World Meteorological Organization, recently estimated that average temperatures across the world could climb by 1.4 to 5.8oC over the coming century. “The scientific consensus presented in this comprehensive report about human-induced climate change should sound alarm bells in every national capital and in every local community,” says Toepfer. “We must move ahead boldly with clean energy technologies, and we should start preparing ourselves now for the rising sea levels, changing rain patterns, and other impacts of global warming.” “These estimates from insurers of the costs of climate change to the world’s economy serve to further underline the need for Governments to act to avert the damaging impacts of rising greenhouse gas levels in the atmosphere,” and he said it is crucial for countries to re-start the climate change talks which were stalled in The Hague last November so that nations can take the first steps to deliver meaningful emission reductions. The estimates come from Munich Re, one of the largest re-insurance companies in the world. “There is reason to fear that climatic change will lead to natural catastrophes of hitherto unknown force and frequency,” says the company’s research head Gerhard Berz. “Studies have indicated, disturbingly, that climatic changes could trigger worldwide losses totaling many hundreds of billions of dollars per year.” The water industry worldwide will face $47 billion of extra costs annually by 2050, and flood defence schemes to stop rising sea levels and storm surges could cost $1 billion per year. In the United States, the extra costs of health-related measures and more intensive water management may reach $30 billion a year by 2050. The insurance industry must adapt to future risks by providing long-term coverage for natural hazards and by promoting action among nations to reduce the build up of greenhouse gases, explains Berz. Climate change has been linked to damage caused by hurricanes, floods, forest fires, earthquakes and deforestation. One of the groups to respond to the report, Friends of the Earth, called for an end to oil drilling and more investment in renewable energy.

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