Climate change may threaten $2.5 trillion in assets: study

A sand berm created by city workers to protect houses from El Nino storms and high tides is seen at Playa Del Rey beach in Los A
A sand berm created by city workers to protect houses from El Nino storms and high tides is seen at Playa Del Rey beach in Los Angeles, California on November 30, 2015

Trillions of dollars' worth of financial assets may be under threat from global warming's effects by 2100, climate economists warned on Monday.

If warming reaches 2.5 degrees Celsius (4.5 degrees Fahrenheit) over pre-Industrial Revolution levels by 2100, investments worth some $2.5 trillion (2.2 trillion euros) may be in danger, a team reported.

This was equal to half the current estimated stock market value of fossil-fuel companies.

But even if the 2 C warming agreed by the world's nations in Paris last December is achieved, the value of assets at risk would be $1.7 trillion, they wrote in the journal Nature Climate Change.

Climate change can destroy assets directly through sea-level rise for example, by depreciating their value, or by disrupting economic activities lower down the chain through drought or freak storms.

A lot of research has focused on the oil, coal and gas investments that will be lost if the world turns its back on fossil fuels in favour of sustainable energy in line with the 2 C target.

The new study attempts to break new ground with the first-ever estimate of a direct impact of on the value of themselves.

The projections, using mathematical models, were based on an estimated value of $143.3 trillion for global non-bank financial assets in 2013, as determined by the Financial Stability Board watchdog, the team said.

At warming of 2.5 C, they wrote, some 1.8 percent of global financial assets could be at risk.

But this could rise to as much as $24 trillion in worst-case-scenario warming.

Lesser evil

Scientists estimate we are on course for warming of about 4 C or more based on current greenhouse gas emission trends, or about 3 C if nations meet the emissions-curbing pledges they filed to back up the Paris climate agreement.

"When we take into account the financial impacts of efforts to cut emissions, we still find the expected value of financial assets is higher in a world that limits warming to 2 C," said co-author Simon Dietz of the Grantham Research Institute on Climate Change.

"This means risk-neutral investors would choose to cut emissions, and risk-averse investors would be even more keen to do so."

Climate change should be an important issue for all long-term investors, such as pension funds, as well as financial regulators, added Dietz.

Sabine Fuss of the Mercator Research Institute on Global Commons and Climate Change in Berlin, said it was not the final word on the topic, but the study did demonstrate that climate risks to the financial system may be substantial.

"This undermines both the need for full disclosure so that climate risks can be assessed and portfolios adjusted accordingly, and the need for more research to develop comprehensive estimates of the risk of such losses," she wrote in a comment published by the same journal.

Explore further

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More information: Nature Climate Change,
Journal information: Nature Climate Change

© 2016 AFP

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Apr 04, 2016
Have they no feet, can they not walk?

Besides new wealth will be created as fast as the old wealth is inundated.

Apr 04, 2016
Man made global warming models and Climate change theory is best described as " a beggar, wrapped in purple, whom ignorant people mistook for a king." Their theory is a mass of errors and deceptive ideas and opposed to common sense.

In reality, the earth's greenhouse effect is a good thing. If not for the greenhouse effect, earth's average surface temperature would be -18°C (Celsius), or -40°F (Fahrenheit). Instead, our planet exists at a livable 15°C, or 59°F.

The weather system of Earth is self-balancing, self-adjusting, self-cleansing.

If you want to know what controls the weather on Earth, look up in the sky, it is called the Sun. The Sun is Prime mover of the weather.

The Sun-Earth-Oceans weather dynamics is too large in scale and size from mankind to have any affect. Only an arrogant Human would think otherwise.

Apr 04, 2016
That's a big IF and a drop in the bucket compared to the trillions ACTUALLY wasted on garbage AGW "science", like this.

Apr 04, 2016
Important to keep in mind that this estimate is based partly on current projections of likely sea level rise.

But they may be too low:

And this is not a linear relationship; double the sea level rise will be a lot more than double the losses. Half the US lives within 100 miles of the sea, and it's higher for the rest of the world.

Apr 05, 2016
You deniers are short sighted fools. Is it your day job to come onto this site and ignorantly comment on these articles?

Apr 05, 2016
"Climate economists", now think about that term for a while. While GW alarmists are determined to impoverish the prols, it's been a boon to academia.

Apr 10, 2016
I think the economists are not getting it.

Climate change will increase world GDP, just like war and crime do.

Politicians will say that's economic growth and its good for the world.

Another point is global temperatures will rise on AVERAGE but that doesn't really say much.

What they don't point out is the nonlinear (exponential) increase and variability of EXTREME weather events such as drought, heat waves, storms and cyclones on the economy and on people. Lots of people will die and be impoverished because of this effect.

This will have far greater general effects before rising sea levels and inundation that will eventuate later on.

Apr 10, 2016
A (Not Quite) Complete List Of Things Supposedly Caused By Global Warming

"[antropomorphic] Global warming is indeed a scam, perpetrated by scientists with vested interests, but in need of crash courses in geology, logic and the philosophy of science. It provides the media with a new scare story, which has been picked up by the focus groups and turned into the new religion, offering us hell if we don't all change our ways." [BBC]


Apr 10, 2016
@marko, what worries me is what all those people who are being impoverished and doing are going to want to do about it. And more importantly what the politicians they vote for will want to do. Let's keep in mind that the two most populous countries in the world are nuclear powers.

Apr 13, 2016
"Let's keep in mind that the two most populous countries in the world are nuclear powers. "

And much of their nations get their water from the glaciers of Asia, which are retreating. We are in for some "interesting" times.

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