How Climate Change Will Have an Economic Impact on Society

Britain’s own challenges

According to an October 2013 report conducted by the Government and the consultant PwC, climate change due to global warming will have a induced changes in the infrastructures of developing countries. As patterns of global crop farming are altered, for example, supplies of food and raw materials are likely to recede. This in turn will mean ever-higher prices and the potential for instability and civil unrest.

Damage to agricultural production is already contributing internationally to deaths from diseases associated with poverty and malnutrition, whilst air pollution due to fossil fuel use is contributing to around 4.5m deaths every year*. By 2030, floods, draughts and the most severe storms could remove 2% from US GDP*.

In China, this cost could be $1.2 trillion*. As international trade in the commodities and services crucial for business and shareholder value shrinks to a footnote, the preservation of a civil and thriving society can only be at the gravest possible risk.

  • 400,000 deaths annually from climate change is wiping 1.6% per
    year from global GDP*
  • Cost to the world economy of climate change is almost $1.3 trillion*
  • Within less than 16 years the cost to global GDP of air pollution
    and climate change will increase to 3.2%*
  • The GDP of developing countries is expected to fall by more
    than 10%.*

*Source: DARA, Climate Vulnerable Forum

Perhaps most visibly and frequently, climate change in Britain finds expression in flooding. Winter 2013-14 has been especially challenging, with thousands of people watching helplessly as huge storms have breached inadequate flood defences and wrought appalling damage to their homes and businesses.

Yet as long ago as 2006, the insurance industry identified flood damage in many high-risk areas as uninsurable. In the six years prior to a report by AXA Insurance on how climate change affects SMEs, weather-related damage claims cost the British insurance sector more than £9 billion. Of this, over £2.5 billion was business-related. The report also forecast that sea-level rises would directly threaten an estimated three million people in the UK, and that business hubs and population centres, among them London, Edinburgh, Bristol, Newcastle, Norwich and Peterborough, may all risk flooding.. The economic consequences should we fail to arrest the march of climate change would be incalculable.

“In my view, climate change is the most severe problem we are facing today – more serious even than that of terrorism.”

Prof Sir David King, former UK Chief Scientific Advisor