Climate Change Disaster Top Threat to Economy in 2016

A catastrophe caused by climate change is seen as the biggest potential threat to the global economy in 2016, according to a survey of 750 experts conducted by the World Economic Forum.

The annual assessment of risks conducted by the WEF before its annual meeting in Davos on January 20-23 showed that global warming had catapulted its way to the top of the list of concerns.

A failure of climate change mitigation and adaptation was seen as likely to have a bigger impact than the spread of weapons of mass destruction, water crises, mass involuntary migration and a severe energy price shock — the first time in the 11 years of the Global Risks report that the environment has been in first place.

The report, prepared by the WEF in collaboration with risk specialists Marsh & McLennan and Zurich Insurance Group, comes a month after the deal signed in Paris to reduce carbon emissions.  The WEF said evidence was mounting that inter-connections between risks were becoming stronger.  It cited links between climate change and involuntary migration or international security, noting that these often had “major and unpredictable impacts.”

Espen Barth Eide, the WEF’s head of geopolitical affairs, said there was a risk of Europe fragmenting as a result of “people on the move.”

Speaking at a press conference in London to launch the report, Eide said:  “I am concerned about the continued support in national politics for keeping Europe together.”

Eide added that if enough countries decided to pursue a non-integrated approach to coping with migration it would have “profound effects on Europe’s politics and its economy,” and would have a knock-on impact on the rest of the world.  “If things unravel at the core, what does it mean in other parts of the world?”

Cecilia Reyes, Zurich’s chief risk officer, said: “Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks.

“Meanwhile, geopolitical instability is exposing businesses to canceled projects, revoked licences, interrupted production, damaged assets and restricted movement of funds across borders.  These political conflicts are in turn making the challenge of climate change all the more insurmountable — reducing the potential for political cooperation, as well as diverting resource, innovation and time away from climate change resilience and prevention.”

The WEF said the broad range of risks — from environmental to geopolitical and economic — was unprecedented.

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