What Are the Financial Costs of Climate Change?

When we hear the term "climate change," we generally think of the environment, right? It's an environmental issue, right? Well, only on the most basic level. Saying climate change is just an environmental issue is like saying the ability to grow food is just an environmental issue.

Climate change is to have a dramatic effect on the farms and natural resources we rely on and the cities we live in. And these are, intrinsically, key parts of our economies.

The severe floods in Pakistan this summer, the extreme fires in Russia, and the massive floods in Tennessee earlier this year are exactly what climate change scientists have predicted. We cannot say that this or that extreme weather event is "due to climate change," but the increasing number of such extreme weather events is exactly what has been predicted for years, and if the scientists are right, the future holds a lot more and bigger ones than we are seeing now.

When we get into calculating the "financial costs" of such events, there are too many ramifying effects, such as physical and mental health effects that cannot be adequately accounted for. But, we can give it a shot and even the less-than-adequate numbers we come up with are tremendous.
Cost of Fires in Russia

Looking at the example of Russia, here are some interesting and sobering figures (as well as the reasons behind them):

* $14 billion, or about 1% of Russia's expected GDP growth, is expected to      be lost as a result of the fires -- some predict more, some less.
* 0.5% of lost GDP is due to agricultural losses (i.e. sugar and grain losses).
* 0.5% is from decreased shopping (due to the hazards of going out in toxic    smog) and decreased productivity and industrial output (for the same          reason).

This is but one disaster in the early years of climate change, and GDP greatly underestimates the long-term value of the environment in the first place. A report evaluating only the financial loss of the trees burnt to the ground, using the market value of timber and the cost of reforestation (not even including factors such as the loss of important insects, rare birds and animals), found that the fires cost Russia $300 billion, over 20 times more than the figure above.

And what is the financial cost of all the lives lost? 50 villages were destroyed and Russia's minister of regional development, Victor Basargin, says they cannot be rebuilt.

As Dr Alexander Ginsburg, a deputy director of the Institute of Physics of the Atmosphere in Moscow, says, this is not expected to be a one-time issue. "Anthropogenic risks are growing, and we should secure ourselves against them. The climate is getting warmer and the extreme instability is growing along with it."

Cost of Floods in Pakistan
The floods in Pakistan, in some ways, dwarf the fires in Russia:

* While the fires in Russia killed approximately 50 people, the floods in            Pakistan killed over two thousand people.
* 20% of the country, the 6th largest country in the world when it comes to    population, was flooded.
* UN Secretary-General Ban Ki-Moon called it "the worst disaster" he'd ever    seen.
* The United Nations estimates that 21 million people have been injured or        left homeless from the flooding.

Since I said I'd be focusing on the "financial costs" of these disasters, here are some strict financial figures:

 * $500 million in wheat crop losses and $4 billion in structural damages are       estimated.
 * $43 billion is the total estimated economic impact of these floods.
 * As of September 7th, 5.3 million jobs were estimated to have been lost         from the floods.

Again, this is but one disaster in one part of the world. And, at this point, how can all the losses really be accounted for financially?

What is the cost of the thousands of lives lost and the suffering of millions more?

And while it is the worst disaster the Secretary-General of the UN has ever seen, the effects of climate change are predicted to be huge and we can expect a lot more like this and worse if people don't stop throwing false accusations at climate scientists, if others don't stop giving them so much weight, and if people and businesses don't organize to address climate change.

How would your business be affected by fires like they saw in Russia or floods like they saw in Pakistan this year?

Source: earthandindustry.com