Climate-related risks and potential impacts: still underestimated?

As predicted by climate models, weather hazards are increasing in both frequency and intensity, and this trend will continue until net greenhouse gas emissions are close to zero (if we don't reach a situation of uncontrollable feedback loops leading to a hothouse Earth by then).

A fair assessment of the risks and associated impacts is therefore crucial in order to limit the dangers to human activities. However, a number of articles and reports show that not only assessments, but also the way they are taken into account by both governments and populations, are still often insufficient, sometimes to an extremely striking degree. Here is a selection.

Climate models underestimate food security risk from ‘compound’ extreme weather - Dr Kai Kornhuber - July 2023

This article (based on several papers published in Nature Climate Change et Nature Communicatons) emphasizes on cases when extreme weather events happen simultaneously and negatively affect crop yields in major crop-producing regions, known as “breadbaskets”.

The conclusion is rather blunt : « Our study reveals that current climate risk assessments may be overlooking sectors and regions at high risk from the complex interactions of several extremes, often linked to dynamical mechanisms in the atmosphere and climate change. /// ... /// The underestimation of synchronised low yields, as well as other areas of high risk, emphasises how the complexity of climate extremes may increase without rapid emissions reductions, perhaps to the point of becoming unmanageable. »

surface temperature anomalies july 2022.jpeg, juil. 2023

Surface temperature anomalies for the week commencing 18 July 2022, with red indicating higher temperatures. The five circled regions are places experiencing higher than normal temperatures concurrently, due to meanders in the jet stream. Credit: UK Met Office (2022)

Let’s note that Swiss Re Institute’s new crop index finds « about 60% of global insurable crop production was unprotected against natural disasters and accidents (eg, fire, disease and insect swarms) in 2022. We estimate the global crop protection gap at USD 113 billion (premium equivalent), up by 28% in nominal terms from 2016, emphasising the importance of agricultural insurance to smooth farmers' income fluctuations. Our natural catastrophe resilience index estimates that about 75% of global risk was unprotected in 2022, with protection gaps largest in emerging markets. »

From a wider standpoint, another paper published in Nature Sustainability invites « humanity to be vigilant for signs that ecosystems are degrading even more rapidly than previously thought. »

Climate risk stress tests underestimate potential financial sector losses - Henk Jan Reinders, Dirk Schoenmaker, Mathijs Van Dijk - June 2023

Given the complexity of the link between climate shocks and financial sector outcomes, the authors argue that current methods have several key limitations that may lead to significant underestimation of potential financial sector losses.

They identify six types of climate-related shocks that are relevant for climate risk assessments: abrupt transition, gradual transition, hot house world, climate-related disaster, 'green swan’ events, and Minsky-type shocks. They offer suggestions for improving climate risk stress-testing (CRST). In particular, they « believe it is important that the next generation of CRST exercises assess the potentially most damaging scenarios (such as ‘green swan’ events or rapid repricing of financial assets) and include feedback loops that can amplify shocks between climate, economic, and financial systems. »

Institute for Economics & Peace. Ecological Threat Report 2022: Analysing Ecological Threats, Resilience & Peace - Sydney - October 2022.

There's a lot to be said for this report. Main findings that struck me :

  • « Regions exposed to the highest level of ecological threat, are on average the least concerned with climate change, with only 27.4 per cent of respondents in Middle East and North Africa and 39.1 per cent of South Asians perceiving climate change as a very serious threat
  • China is one of the countries least concerned about the impact of climate change in the next 20 years at just 20.1 per cent. India, the third largest polluter, scores poorly at 38.8 per cent.
  • In 2050, 3.4 billion people will reside in countries facing catastrophic ecological threats, compared to 2 billion in 2022. Their populations will account for 34.7 per cent of the world's total population. Most of the increase will be in sub-Saharan Africa. »

Interesting to cross this information with XDI’s Gross Domestic Climate Risk ranking where China has 14 of its provinces among the 15 with highest « aggregated damage ratio » (for about 800M people), while many of them also rank high in terms of « average damage ratio ».

xdi systems risk index aggregated.png, juil. 2023
States / provinces sorted by Aggregated Damage Ratio which "looks at the total amount of damage to the built environment in a particular province. Damage Ratios are aggregated and normalised to give insight into the extent of risk to the built environment as a whole, so that states with more stock exposed can be identified."

xdi systems risk index.png, juil. 2023
States / provinces sorted by Average Damage Ratio which "provides insight into states and provinces that may have fewer properties but which may be subjected to greater or more widespread damage, so the proportion of damage is higher." Africa and South East Asia clearly appear as the most vulenrable areas in this respect.

On a more positive note, the last part of IEP’s report provides policy recommendations and concrete examples so as to build resilient food systems, foster water resilience, improve rural development.

As mentioned in the latest synthesis report of the Intergovernmental Panel on Climate Change (2023) : « feasible, effective, and low-cost options for mitigation and adaptation are already available, with differences across systems and regions. »

« Rapid and far-reaching transitions across all sectors and systems are necessary to achieve deep and sustained emissions reductions and secure a liveable and sustainable future for all. These system transitions involve a significant upscaling of a wide portfolio of mitigation and adaptation options. »

Multiple possibilities for sure, but in « a rapidly narrowing window of opportunity »...

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