People are already impacted by food system shocks, water insecurity, heat stress and infectious diseases. If unchecked, mass mortality, mass displacement, severe economic contraction and conflict become more likely.
ADVERTISEMENTClimate change could cause a 50 per cent loss of global GDP if policymakers continue not to recognise the severity of the crisis. That’s the warning coming from the Institute and Faculty of Actuaries (IFoA) and the University of Exeter in a new report published Thursday. Titled “Planetary Solvency – Finding Our Balance with Nature,” the study calls for accelerated action by political leaders to tackle the climate crisis.It comes after data from the EU’s Copernicus Climate Change Service showed the annual global temperature had broken the internationally agreed 1.5C target for the first time in 2024.“Populations are already impacted by food system shocks, water insecurity, heat stress and infectious diseases,” says the IFoA. “If unchecked, mass mortality, mass displacement, severe economic contraction and conflict become more likely.”Scientists are clear that exceeding this 1.5C temperature limit could trigger multiple ‘tipping points.’ Crossing these irreversible boundaries risks permanent damage to the Earth’s systems, supercharging extreme weather events.“You can’t have an economy without a society, and a society needs somewhere to live,” says Sandy Trust, lead author and IFoA Council Member “Nature is our foundation, providing food, water and air, as well as the raw materials and energy that power our economy. “Threats to the stability of this foundation are risks to future human prosperity which we must take action to avoid.”The authors state that “these damages already outweigh the mitigation costs required to limit global warming to 2C,” noting that, economically, it will be overwhelmingly positive to limit global warming.Widely used but deeply flawed assessments belittle the GDP impact of climate changeWithout urgent action on decarbonisation and repairing nature, the IFoA report says that global economies could be hit by a 50 per cent loss in the two decades before 2090.The IFoA hits out at previous estimates of GDP impacts of climate change, saying that they exclude most of the most severe risks. Risk management assessments to date often focus on single risks in isolation, without accounting for interconnected or compounding risks.“This is analogous to carrying out a risk assessment of the impact of the Titanic hitting an iceberg but excluding from our model the possibility that the ship could sink, the shortage of lifeboats, and death from drowning or hypothermia,” says IFoA.Specifically, it says an estimate of a 2 per cent drop in GDP by 2100 as a result of 3C warming published by Nordhaus and Boyer is still being used by policymakers to justify inaction. “Widely used but deeply flawed assessments of the economic impact of climate change show a negligible i
