Climate disasters could cost $7.8 trillion in losses by 2050

LONDON • Worsening droughts, storms and torrential rain in some of the world's largest economies could cause US$5.6 trillion (S$7.8 trillion) in losses to the global economy by 2050, according to a new report.

This year, heavy rain has triggered floods that inundated cities in China and South Korea and disrupted water and electricity supply in India, while drought has put farmers' harvests at risk in Europe.

Such disasters are costing economies hundreds of billions of dollars. Last year's extreme droughts, floods and storms led to global losses of more than US$224 billion, according to the Emergency Events Database maintained by the Brussels-based Centre for Research on the Epidemiology of Disasters.

As climate change fuels more intense rainfall, flooding and drought, these costs are set to soar, warns the report by engineering and environmental consultancy firm GHD.

Among sectors vital to the global economy, manufacturing and distribution would be hit hardest by disasters costing US$4.2 trillion as water scarcity disrupts production, while storms and floods destroy infrastructure and inventory.

The agricultural sector, vulnerable to both drought and extreme rainfall, could see US$332 billion in losses by 2050. Other sectors facing major challenges are retail, banking and energy.

REUTERS