Over the past two decades, the climate crisis has wreaked havoc through extreme weather events, incurring a staggering cost of $16 million (£13 million) per hour, according to a recent estimate.
The toll from storms, floods, heatwaves, and droughts has been exacerbated by global heating, intensifying their frequency and impact. This study marks the first attempt to quantify the global financial burden directly linked to human-induced climate change.
The research indicates an average annual cost of $140 billion (£115 billion) from 2000 to 2019, although this figure exhibits significant variations from year to year. The most recent data reveals a staggering $280 billion in costs for 2022 alone.
However, the researchers caution that the figures are likely seriously underestimated due to insufficient data, particularly from low-income countries. Moreover, additional climate-related costs, such as crop yield declines and sea-level rise, were not factored into the analysis.
The methodology employed by the researchers involved combining data on the exacerbation of extreme weather events due to global heating with economic data on the resulting losses. Over the two decades under consideration, the study found that 1.2 billion people were affected by extreme weather events attributable to the climate crisis.
Of the total damage costs, two-thirds were attributed to lives lost, while the remaining third resulted from the destruction of property and other assets. Storms, exemplified by events like Hurricane Harvey and Cyclone Nargis, accounted for two-thirds of climate-related costs, with 16% attributed to heatwaves and 10% to floods and droughts.
The researchers suggest that their methods could be instrumental in determining the funding required for a loss and damage fund established at the UN’s climate summit in 2022. This fund aims to finance the recovery efforts in poorer countries affected by extreme weather disasters, with the potential for expeditious assessments of specific climate costs for individual disasters, facilitating swifter fund disbursement.
“The headline number is $140bn a year and, first of all, that’s already a big number,” said Prof Ilan Noy, at the Victoria University of Wellington in New Zealand, who carried out the study with colleague Rebecca Newman. “Second, when you compare it to the standard quantification of the cost of climate change [using computer models], it seems those quantifications are underestimating the impact of climate change.”
Noy said there were a lot of extreme weather events for which there was no data on numbers of people killed or economic damage: “That indicates our headline number of $140bn is a significant understatement.” For example, he said, heatwave death data was only available in Europe. “We have no idea how many people died from heatwaves in all of sub-Saharan Africa.
While acknowledging a sevenfold increase in reported losses from extreme weather disasters since the 1970s, according to the World Meteorological Organization, the study stands out for its approach. Unlike computer models based on average global temperature changes, this study utilises the fraction of damages attributed to human-induced heating, drawing from numerous “attribution” studies that assess the increased frequency of extreme weather events due to global heating.
The central estimate of an average annual climate cost of $140 billion, with a range from $60 billion to $230 billion, surpasses estimates from computer models. Notably, the study highlights the difficulty in disentangling the effects of global heating from factors like population growth, urban migration, and improved disaster reporting.
Examining the years with the highest climate costs, 2003, 2008, and 2010 stood out due to a severe European heatwave, Cyclone Nargis in Myanmar, and drought in Somalia combined with a Russian heatwave, respectively. The analysis considers a statistical value of a life lost at $7 million, an average of figures used by the US and UK governments.
“A lot of people are very uncomfortable with the idea that we put a price tag on a life,” said Noy. “But this is very standard economic practice and comes about because, ultimately, we need make decisions about [the value of] investments in various things.”
The study challenges the perspective that only economic damage to infrastructure should be considered in cost estimates, asserting that this approach would disproportionately favour rich countries, despite the brunt of damage falling on poorer nations.
The findings prompt reflection on the $140 billion damage estimate against the yet-to-be-fulfilled $100 billion promised by rich countries to aid poorer nations affected by climate-related disasters. It also draws attention to the stark contrast with the fossil fuel industry’s annual subsidies of $7 trillion.
Ultimately, the study’s insights resonate with the decisions made at the UN climate summit in 2022 to establish a loss and damage fund, emphasising the importance of expeditious attribution studies to promptly estimate and address climate-related damages.
“You can use our methodology to start putting numbers on how much money we need in the fund,” Noy said.
Ideally, he said, a quick attribution study on an extreme weather event would estimate the climate-related damage and lead to a rapid delivery of funds: “It would be a kind of insurance scheme for countries.” The methodology might also be useful for determining damages in climate lawsuits, he said.
Dr Stéphane Hallegatte, at the World Bank and not part of the study team, said: “The key message is that climate change is visibly increasing global economic losses from disasters. This has been a topic of controversy, with some claiming that climate change effects are negligible compared with other factors like economic growth and urbanisation.
“This study looks at the attribution for the physical event – it’s much simpler, robust, and it provides a convincing case. It is an emerging field and uncertainties are really large. One lesson of the study is that global research centres – mostly located in rich countries – need to work more on what is happening in poorer countries.”
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