We tend to think of climate change like the retreat or growth of a glacier, a slow and steady process, almost imperceptible, but following a manageable path.
That is a mistake, warns the Tipping Points Report published by Allianz and WWF. Climate change is a lot more like an avalanche than just heavy snowfall. Pressure builds until a threshold, or tipping point is passed, and catastrophe ensues. Warming of global temperatures is likely to take an unpredictable turn – one that could cost the world hundreds of billions.
If action is not taken immediately, sea level rise on the East Coast of the USA, the shift to an arid climate in California, disturbances of the Indian Summer Monsoon in India and Nepal or the dieback of the Amazon rainforest due to increasing drought, are likely to affect hundreds millions of people.
The study explores impacts of these tipping points, including their economic consequences and implications for the insurance sector. It also shows how close the world is to reaching tipping points in many regions of the world.
If we dont take action against climate change, it will happen in a disruptive and devastating way, said Kim Carstensen, the Head of WWF Global Climate Initiative. Reaching a tipping point means losing something forever. I dont think anyone likes the idea of losing anything forever.
According to the report, carried out by the Tyndall Centre, the impacts of passing Tipping Points on the livelihood of people and economic assets have been underestimated so far. The report therefore focuses on regions and phenomena where such events might be expected to cause significant impacts within the first half of the century.
As an insurer and investor, we must prepare our clients for these scenarios as long as we still have leeway for action, says Clemens von Weichs, CEO of Allianz Reinsurance. Setting premiums risk-appropriately and sustainably is of vital interest to everyone involved, because this is the only way to ensure that coverage solutions will continue to exist.
Allianz intends to address climate change by entering into dialogue with its clients at an early date. This will allow it to point out countermeasures in a timely way, and work together to develop specific coverage concepts, whether for existing assets or for future climate-compatible projects like alternative energy and water supply concepts, dyke construction, or protection against failed harvests.
Global temperatures have already risen by at least 0.7 degrees Celsius. Global warming above 2-3 degrees in the second half of the century is likely unless extremely radical and determined efforts towards deep cuts in emissions are put in place before 2015.
The melting of parts of the Greenland (GIS) and the West Antarctic Ice Shield (WAIS) could lead to a Tipping Point scenario, possibly a sea level rise of up to 0.5 meters by 2050. This is estimated to increase the value of assets at threat in all 136 global port mega-cities by around 25,000 billion USD.
On the North-eastern coast of the USA and due to a localized anomaly, the sea level could rise up to 0.65 meters, increasing the asset exposure from 1,350 to about 7,400 billion USD
The South Western Part of the USA, namely California, is likely to be affected by droughts and levels of aridity similar to the Dust Bowl in the 1930s. The annual damages caused by wildfires could be tenfold compared to todays costs and could reach up to 2.5 billion USD per year by 2050 increasing to up to 14 billion by 2085.
70 percent of working population may be put at risk by droughts in India. The future costs of droughts are expected to rise to approx. 40 billion USD per decade until the middle of the century.
The committed dieback of the Amazon Rainforest as a consequence of a significant increase in the frequency of droughts in the Amazon basin could reach 70% by the end of the century in a tipping point scenario. The impacts include loss of biodiversity and massive carbon release. Costs could reach up to 9.000 billion USD for a surface of around 4 million square kilometers.
The Tipping Points report shows how quickly we are approaching the dangerous and irreversible level of global warming, Carstensen said. Economic consequences of passing the climate tipping points are absolutely overwhelming.
There is still a chance to avoid the worst and this report shows how urgent it is to act immediately. An agreement in Copenhagen is the best, if not the only chance to prevent the worst impacts of devastating climate change.
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