by Sangeeta Haindle - A new study by the London School of Economics (LSE), published in the peer-reviewed journal Nature Climate Change, says climate change could cut the value of the world’s financial assets by $2.5tn (£1.7tn). This research used economic modelling to estimate the impact of unchecked climate change and found that losses would be caused by the direct destruction of assets by increasingly extreme weather events, and also by a reduction in earnings for those affected by high temperatures, drought and other climate change impacts. It states that if action is taken to tackle climate change, then financial losses would be reduced, though other assets such as fossil fuel companies would lose value.
The global climate summit in Paris last December set a goal of limiting global warming to “well below” 2°C above pre-industrial times, while leaving open how this would be achieved. If the global temperature rise were limited to 2°C by 2100, the study’s central scenario put the total of current financial assets’ damages at $1,7 trillion. However, if the temperature rose a further 0.5°C by the end of the century, $2.5 trillion would probably be at risk. While at the extremes of the study’s thousands of scenarios based on a 2.5°C rise, the value at risk ranges from 0. 5 percent of total financial assets up to a worst case of 17 percent, or $24 trillion.
The study did not identify which sectors were most at risk from the damage that climate change can wreck, ranging from the destruction of buildings, bridges or roads by storms or floods to losses of agricultural productivity and enforced movement of populations.
Coincidentally, at the same time that the LSE study was published, the White House also released its final report on climate change, The Impacts of Climate Change on Human Health in the United States: A Scientific Assessment.
A statement from the White House about this study warns, “From children to the elderly, every American is vulnerable to the health impacts associated with climate change, now and in the future.” A few examples of the increased health risks found in this report include: increase in air pollution and airborne allergens, making allergy and asthma conditions worse, where it is projected to lead to hundreds to thousands of premature deaths, hospital admissions, and cases of acute respiratory illnesses each year in the U.S. by 2030; while warmer winter and spring temperatures are set to lead to earlier annual onset of Lyme disease cases in eastern America; and extreme heat is to be expected to cause an increase in the number of premature deaths.
Both of these studies come at a pivotal time, where the consequences of climate change are being felt around the world. The urgency of these warnings reflects the growing understanding among scientists of the widespread impacts of climate change, and that climate change is already underway. No matter what we do, it can’t be stopped, but cutting carbon emissions can reduce the impact.
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