21 January 2014, 20:24

Climate change on Earth costs $1.2 trillion to global economy - environmentalists

Climate change on Earth costs $1.2 trillion to global economy - environmentalists

Climate change on Earth increasingly affects the global economy. Not only agriculture depends on the weather, but also the energy sector, transportation and communal services. Financial losses coming from draughts, floods, hurricanes and typhoons are estimated at trillions of US dollars.

Natural disasters, climate change, food and drinking water crisis – the experts at the World Economic Forum have specified the main global risks the world is facing in 2014. According to the scientists, every year the global economy looses 1.5 percent of its gross domestic product and $1.2 trillion dollars due to the influence of the climate change on Earth. By 2030 these indicators will double. For the poorest states of the world the financial losses could reach 11 percent of their GDP.

For example, the increase of temperature by 1.5 degrees in the Central Asian countries brings a threat of crop yield decrease and serious losses for the local agriculture. The profitability of the sector could decrease by 50 percent, thus ruining the already weak economy of the region. Ecologists point out that a wide band of countries could fall into the risk zone – from Portugal to Eastern China, as well as fairly expansive territories of Africa, Asia and Latin America.

One must take into account that climate change can entail not only draught, but also other cataclysms: showers, floods, hurricanes, tornadoes, rise of epidemic diseases, says Alexey Gromov, head of the energy department at the Institute for Energy and Finance.

"One can consider to be negative consequences the loss of balance of long term climatic parameters and its effect on the number of catastrophes, natural disasters, which in its turn entails growth of insurance payouts to overcome the consequences and restore the economies. These indicators have been exponentially growing over the last few years and thus also have a negative effect on economic development," he said.

Nevertheless, scientists believe that some countries, especially the Northern ones, will manage to benefit from climate change. Specifically, Russia's economy could benefit from a slight increase in average annual temperature, says Sergey Khestanov, an economist and managing director of the ALOR Group of Companies.

"Russia can draw potential benefits from two factors. First of all, due to the climate warming the territory useful for farming has increased. Secondly, and that is a more important factor, is the shift of the borders of the ice coverage. Navigation of the Northern Sea Route by ordinary class vessels has improved. Consequently, interest towards the Northern Sea Route as a transportation artery is increasing and due to the warming ordinary cargo ships can use that route. And taking into account the fact that the route from South east Asia to Europe is much shorter via the Northern Sea Route than via the Suez Canal and it is a pirate free zone, Russia can get a significant economic benefit from that," he said.

Climate specialists are calling upon the leaders of the world countries to start preparing to live in new climatic conditions. Much attention should be given to the development of the infrastructure of coastal territories: to the construction of dams and walls to protect the coastal zones from floods and coastline erosion. The adaptation measures would not only help decrease the negative consequences of climate change, but also bring additional benefits for the economy.

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