A new report has emerged stating that Asian GDP could take a $8.5 trillion hit from natural disasters driven by climate change, with the global price tag of natural disasters said to be more than $17 trillion.
The data comes from the World Resources Institute (WRI), and says that by 2030, the hit to Asia’s GDP could reach as high as $8.5 trillion from climate change and floods- devastating the Asian economy.
The WRI says that the economic output for areas around the world that are located close to a river risk taking a $17 trillion hit from the risk of flooding and other natural disasters.
Unfortunately for the Asian continent, the WRI reports that more than half of this ($8.5 trillion-worth) potential damage is based in Asia, with India and China at considerable risk of having their economies interrupted by climate-change related disasters.
According to a report from Nikkei Asia, “the WRI tool divides up the world by single square kilometers and calculates the gross domestic product for each square using population figures and GDP per capita of the country.”
This led the researchers at the WRI to conclude that by 2030, the world risks taking a $17 trillion hit to GDP and economic growth from a ‘once-in-a-lifetime- flood event,’ which would amount to around 12% of the GDP growth forecasted for the year 2030.
More detailed analysis of this figure shows that Asian GDP could take a $8.5 trillion hit from climate change and floods. Reports state that “in the absence of effective flood prevention measures being taken, that is expected to reach $14 trillion in 2050 and $24 trillion in 2080.”
This led authors of the report to state that by 2030, China looks set to be the Asian country most impacted by events triggered by climate change and natural disasters. “The total GDP of the area at risk was $4.6 trillion, or 14% of the country’s overall GDP. Four of the top five countries in terms of risk exposure are in Asia,” writes Nikkei Asia.
The institute says that for countries particularly in the Asian continent, the cost benefits of investing in their infrastructure outweigh the potential damage bill if and when those natural disasters strike. It expects that China will have to foot a $347 billion infrastructure bill to mitigate the threat of rising water levels, while India would be forced to spend around $217 billion.
These, however, are worthwhile investments compared to the costs of a once-in-a-lifetime natural disaster, argues the WRI.
“Investing in protective measures like levees and dikes is not only important for safeguarding millions of people and their homes and businesses, but also to help grow economies,” says the WRI. “In the face of multiplying threats from climate change, infrastructure is a resilient, high-performing solution that also creates jobs.”
The researchers at the World Resources Institute also say that aside from the damage of rising water levels in rivers, coastal sea level changes are set to become a costly expense for a number of countries around the world.
The WRI says that its analysis found that a one-in-a-lifetime coastal flooding event in 2030 would cost the globe $850 billion, with Asia once again hit particularly hard, accounting for 70% of the damage bill. Again, China looks set to bear the brunt of the damage bill.
Nikkei Asia’s reporting states that “the actual number of natural disasters that cause economic damage is continuing to rise, according to data from reinsurer Munich Re in Germany, reaching 820 in 2019, a threefold increase from 1980. Among those disasters, flooding has increased more than six-fold over the same period.”
Analysts predict that developing nations located in Asia will be hit particularly hard, due to their “fragile infrastructure” that can halt economic activity for a prolonged period. The authors of the report look to India’s city of Mumbai as an example, which can be flooded with hundreds of millimeters of rain in any given day of the four-month wet season.
The WRI says that India’s infrastructure can stand, on average, a once-in-11-year flooding event, while Bangladesh can withstand a one-in-3-year flood. Japan, on the other hand, has more developed infrastructure that WRI says can withstand a once-in-91-year flood.
The fact that the Asian GDP could take $8.5 trillion hit from natural disasters goes to prove the importance of both environmental management and risk-based thinking moving into the future.
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