Climate change is a global reality and a collective imperative. The devastating effects of climate change, such as extreme weather events, rising sea levels, and biodiversity loss, are becoming increasingly evident and threaten economic and social stability.
The Intergovernmental Panel on Climate Change (IPCC) Sixth Synthesis Report, published on March 20, 2023, highlights alarming conclusions that call for urgent and ambitious action to preserve our planet.
The consequences of climate change impact our ecosystems and societies. For example, in recent years we have seen a significant increase in:
Heatwaves: heatwaves are more frequent and intense. In Europe, for instance, the summer of 2023 was marked by record temperatures, affecting millions of people and worsening forest fires.
Extreme precipitation: intense precipitation events have become more frequent, leading to devastating floods. In 2024, floods in Germany, Italy, and France reached record levels. In April 2024, floods in the southern states of Brazil caused the deaths of around one hundred people and left as many missing, affecting more than 1.5 million people and causing extremely costly damages.
Droughts: droughts are increasing, affecting agriculture and water resources. In the United States, California is experiencing a prolonged drought that has led to significant agricultural losses and water restrictions. In Africa, the lack of access to quality water results in annual losses estimated at nearly $28.4 billion, or about 5% of GDP. Furthermore, according to the United Nations Convention to Combat Desertification, up to 40% of the planet's land is degraded, directly affecting half of the world's population and threatening about half of the global GDP ($44 trillion).
Cryosphere melting: the melting of glaciers and ice caps contributes to rising sea levels, threatening coastal areas. Greenland lost about 3,800 billion tons of ice between 1992 and 2018. Rising sea levels and coastal erosion will threaten infrastructure and coastal populations, requiring massive investments in adaptation strategies. In Africa, these costs could represent 5 to 10% of GDP by the end of the 21st century. An estimated 150 million climate refugees are predicted by 2050.
IMPACT OF CLIMATE CHANGE ON THE GLOBAL ECONOMY
While climate change is an ecological crisis threatening our ecosystems, biodiversity, and societies, it is also an economic crisis affecting all sectors and regions worldwide.
Impact on Agriculture and Food Security
Agriculture is one of the most vulnerable sectors to climate change. As we have seen, extreme weather events such as droughts, floods, and heatwaves disrupt crop cycles and reduce agricultural yields. According to the Food and Agriculture Organization (FAO), agricultural production losses due to extreme weather events amount to approximately $12 billion annually in developing countries.
Moreover, reduced agricultural yields lead to higher food prices, exacerbating food insecurity and increasing the risk of malnutrition, especially in already vulnerable regions. For example, according to the IPCC, droughts in sub-Saharan Africa have reduced corn production, a staple food, increasing prices by more than 30% in some areas.
Costs to Infrastructure and Cities
Infrastructure, particularly in coastal areas, is severely threatened by rising sea levels and more frequent and intense storms. The World Bank estimates that adaptation costs to protect coastal infrastructure from rising sea levels could reach $89 billion annually by 2030.
Cities, in particular, face substantial economic impacts. Urban flooding can lead to significant property damage, productivity losses, and high reconstruction costs. For example, the 2017 floods in Houston caused by Hurricane Harvey resulted in approximately $125 billion in damages.
Health Impacts and Associated Costs
Climate change also has direct repercussions on public health, leading to increased medical costs. Heatwaves increase mortality and morbidity related to cardiovascular and respiratory diseases. According to a report by the Lancet Commission on Health and Climate Change, health costs associated with heatwaves could reach $4 billion annually by 2030 in the United States.
Furthermore, the spread of vector-borne diseases such as malaria and dengue, facilitated by higher temperatures and changing weather patterns, imposes additional financial burdens on healthcare systems, particularly in tropical countries.
Financial Sector and Investment Risks
Climate-related risks also impact the financial sector. Natural disasters increase insurance claims, leading to higher premiums and increased costs for policyholders. Additionally, assets exposed to climate risks, such as coastal properties, may lose value, causing disruptions in real estate and financial markets.
Investors are increasingly aware of these risks. The IPCC report highlights that trillions of dollars in financial assets are at stake and that the overall economic cost of inaction could reach $23 trillion by the end of the century if current trends continue.
To conclude, the economic impacts of climate change are vast and interconnected, affecting all sectors and regions. The costs of inaction are astronomical, while investments in climate change mitigation and adaptation can offer significant economic returns. Governments, businesses, and communities must act in a coordinated manner to reduce greenhouse gas emissions and enhance resilience to the inevitable impacts of climate change.
ABOUT APOLOWNIA
Apolownia is a mission-driven company committed to making a significant impact in the climate sector.
We support businesses and funds willing to engage in long-term and impactful decarbonization strategies - within and beyond their own value chain - by designing, implementing and monitoring science-based carbon reduction projects that restore natural ecosystems.
Through technology and innovative solutions, we aim at shaping a resilient and environmentally friendly world, by encouraging the decarbonization of the economy and supporting social and environmental initiatives.
You can drive positive change for the climate, biodiversity and local communities.
Contact us to engage or for more information. Find us on www.apolownia.com.
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