Business report

Floods and other water-related disasters could cost the global economy $5.6 trillion by 2050

LONDON, Aug 29 (Reuters) – Worsening droughts, storms and torrential rains in some of the world’s biggest economies could lead to $5.6 trillion in losses for the global economy by 2050, according to a report published on Monday.

This year, heavy rains have triggered floods that have inundated cities in China and South Korea and disrupted water and power supplies in India, while drought has endangered farmers’ crops across the country. ‘Europe.

Such disasters cost economies hundreds of billions of dollars. Extreme droughts, floods and storms last year resulted in global losses of more than $224 billion, according to the emergency events database managed by the Center disaster epidemiology research center based in Brussels.

But as climate change fuels more intense rainfall, floods and droughts in coming decades, those costs are set to skyrocket, warns the report from environmental engineering and consultancy firm GHD.

Water – when there is too much or too little – can “be the single most destructive force a community can experience,” said Don Holland, who runs GHD’s Canadian Water Market program.

GHD has assessed water risks in seven countries representing varying economic and climatic conditions: the United States, China, Canada, United Kingdom, Philippines, United Arab Emirates and Australia. Using global insurance data and scientific studies on how extreme events can affect different sectors, the team estimated the amount of losses countries face in terms of immediate costs as well as to the overall economy. .

In the United States, the world’s largest economy, losses could total $3.7 trillion by 2050, with US gross domestic product shrinking by about 0.5% each year until then. China, the world’s second-largest economy, faces cumulative losses of about $1.1 trillion by mid-century.

Of the five most vital industries for the global economy, manufacturing and distribution would be hardest hit by disasters costing $4.2 trillion as water scarcity disrupts production while storms and floods destroy infrastructure and stocks.

The agricultural sector, vulnerable to both drought and extreme rainfall, could suffer losses of $332 billion by 2050. Other sectors facing major challenges include retail, banking and energy. .

At this year’s World Economic Forum in Davos, Switzerland, a global group of experts launched a new Water Economics Research Commission that aims to advise policymakers on water management.

We must “transform the way we govern water and climate together,” said commission co-chair Tharman Shanmugaratnam. “The costs of doing so are not insignificant, but they are dwarfed by the costs of letting extreme weather conditions wreak havoc.”