Climate change has enormous implications for the world, affecting countries and regions and having the potential to significantly disrupt many industries, such as agriculture and insurance. Among other possible disastrous effects, climate change may account for both more frequent and more powerful hurricanes. While much attention has been paid to climate change that may occur as a direct result of human action—such as carbon emissions—large-scale natural phenomena could have extraordinary repercussions globally. One region of concern for climate change is the Arctic, which if it begins to warm pose economic cost scenarios that are difficult to imagine.
In recent comments on the Web site of the authoritative scientific journal Nature (www.nature.com) titled “Climate science: Vast costs of Arctic change”, Gail Whiteman, Chris Hope and Peter Wadhams provide a dire warning as to what could happen as a result of a warming Arctic. They initially point out the financial benefits the Arctic could provide:
“Most economic discussion so far assumes that opening up the region will be beneficial. The Arctic is thought to be home to 30% of the world’s undiscovered gas and 13% of its undiscovered oil, and new polar shipping routes would increase regional trade1, 2. The insurance market Lloyd’s of London estimates that investment in the Arctic could reach US$100 billion within ten years3.”
They then go on to make this stunning assertion (all boldfacing and italics added for emphasis):
“We calculate that the costs of a melting Arctic will be huge, because the region is pivotal to the functioning of Earth systems such as oceans and the climate. The release of methane from thawing permafrost beneath the East Siberian Sea, off northern Russia, alone comes with an average global price tag of $60 trillion in the absence of mitigating action — a figure comparable to the size of the world economy in 2012 (about $70 trillion). The total cost of Arctic change will be much higher.”
Whiteman, Hope and Wadhams then explain what regions will be most affected by the warming:
“Much of the cost will be borne by developing countries, which will face extreme weather, poorer health and lower agricultural production as Arctic warming affects climate. All nations will be affected, not just those in the far north, and all should be concerned about changes occurring in this region….The economic consequences will be distributed around the globe, but the modeling shows that about 80% of them will occur in the poorer economies of Africa, Asia and South America. The extra methane magnifies flooding of low-lying areas, extreme heat stress, droughts and storms.”
Based on various models the authors ran, these effects may not occur for approximately 20-30 years, but if the modeling is accurate the ultimate effects could be catastrophic for millions of people.
A copy of the comments may be downloaded here. Climate change is of interest to Crawford since is regularly involved in handling insurance claims from major weather events around the world, often (but not exclusively) through it Global Technical Services (GTS®) business, which operates focuses on large and/or complex insurance losses. You can read more about GTS’ claims management efforts related to hurricanes, earthquakes, floods, and other causes in the most recent issue of its Tech Talk newsletter here.
Do you think Arctic warming is a credible threat? Are you concerned about it or is too far off or too theoretical to worry about? Why or why not? Share your thinking with other readers.