Climate change: Urgent need to adapt, says study

Risks from climate change to governments and businesses, as well as its impact on human health and well-being, need to be urgently reassessed as the threats from extreme weather grow, a major study said.

"Climate change is already having substantial physical impacts at a local level in regions across the world, and the affected regions are likely to grow in number and size," added the report from the McKinsey Global Institute released on Thursday.

It said the social and economic risks of the changing climate suggest many assumptions about the risks and potential damage need to be revisited.

The study found that if greenhouse gas emissions keep rising unchecked and nothing is done to adapt to the growing hazards, which include rising temperatures, drought and higher sea levels, "climate change could put hundreds of millions of lives, trillions of dollars of economic activity, and the world's physical and natural capital at risk".

Natural capital refers to ecosystems such as rainforests, mangroves and coral reefs that provide essential benefits for human livelihoods.

The report's release comes as Australia faces an unprecedented bush fire crisis exacerbated by prolonged drought, record high temperatures and record low rainfall. The report focused on the risks from climate change up to 2050, and used climate model projections that assume the world makes no effort to cut emissions or to adapt.

While this seems to be an overly gloomy baseline, the idea was to assess the physical effects of climate change, including the potential effects on people, communities and economic activity, and the implications for companies, governments, financial institutions and individuals.

Taking a risk-management approach gives decision-makers a better sense of the challenge, Dr Jonathan Woetzel, director of the McKinsey Global Institute, told The Straits Times in an e-mail. It also helps them focus on what needs to be done.

The authors examined nine case studies to test climate change impacts. These included the greater risk of lethal heatwaves in India and reduction of working hours outdoors, destruction of houses in Florida from storms, and disruption to supply chains.

They found that the social and economic impacts of climate change will likely become "non-linear", meaning unpredictable or more extreme than expected or designed for, with small changes tipping things over the edge. For example, countries that are already hot could become more hazardous to live and work in as temperatures rise. More intense heat and droughts also threaten crops and water supplies, and trigger more frequent wildfires.

Supply chains are at risk because they are often designed for efficiency over resiliency, said Dr Woetzel.

"Food production is also heavily concentrated; just five regional 'breadbasket' areas account for about 60 per cent of global grain production. Rising climate hazards might therefore cause such systems to fail," said the authors.

Stepping up adaptation is also an urgent priority. "Adaptation is essential to help manage risks, even though this could prove costly for affected regions and entail hard choices," said Dr Woetzel.

"Preparations for adaptation - whether seawalls, cooling shelters or drought-resistant crops - will need collective attention, particularly about where to invest versus retreat."