The specialized consulting company GHD has released a new piece of study named “Aquanomics,” in which they assess the future economic impact of water risk caused by floods, earthquakes, and wildfires across 10 different geographical areas. It was discovered that an astounding $5.6 trillion might be lost by the year 2050, with more than $1.3 trillion of that amount lost during the following decade alone. It is anticipated that the economies of Australia, the Philippines, and the United States will all endure declines that will be the largest on average.
Only in 2022 have heavy rains caused flooding in towns and caused disruptions in the delivery of water and electricity, while droughts have put the crops of farmers in jeopardy. The Centre for Research on the Epidemiology of Disasters estimates that the harsh rains, floods, and storms that occurred around the world in 2012 were responsible for nearly $224 billion in damages worldwide.
GHD has quantified the damage caused by greater rainfall (which, in turn, raises the chances of storms and floods) as well as longer, hotter prolonged drought and wildfires by using a computer that was developed specifically for them. According to the findings, hurricanes have the greatest influence on the economy (49%) second by drowning (36%), and then drought (15%).
The amount of loss varied from nation to country and from country to region to region due to the state of the area’s equipment, the local climate and geographic factors, the predominate industries, and the local preventative systems, including the policies that were already in place. In the decades leading up to 2050, economists anticipated that the economies of Australia, the Philippines, and the United States would experience a yearly GDP decrease of 0.5% to 0.7% on average. On the other hand, it was projected that both the United Arab Emirates and the United Kingdom have only a 0.1% impact on the GDP on an annual average basis.
Industry and transmission were predicted to be the heaviest hit of the five vital segments of the global economy, with costs of $4.2 trillion as a result of water scarcity, which disrupts production, as well as storms and flooding, which destroy infrastructure and inventory. On the other hand, GHD anticipated that all five industries – banking and insurance, energy and utilities, fast-moving consumer goods and retail, and manufacturing and distributions – would experience significant output losses, which would have an effect on the millions of people who work within these areas of the economy.
According to a report by Reuters, a global group of specialists created a new commission to explore the economics of water at the 2022 World Economic Forum, which was held in Davos, Switzerland. The commission’s goal is to advise policymakers on how to effectively achieve water resources. Tharman Shanmugaratnam, who is also the co-chair of the commission, stated that it is time to “change how we control water and the climate together.”
According to Shanmugaratnam, “the costs of doing this are not minor, but they are dwarfed by the costs of allowing catastrophic precipitation wreak devastation.”