The Parasol Lost report from the Institute and Faculty of Actuaries and the University of Exeter outlined the extreme severity of climate change, Green Futures Solutions reported.
What is the Parasol Lost report?
New findings suggest that older projections for the financial impact caused by pollution and the resulting rising temperatures around the globe significantly underestimated the problem.
The previous consensus was that the world faced a loss of 2.1% of global GDP if there was a 3 degrees Celsius (5.4 degrees Fahrenheit) total rise in temperature, and 7.9% of global GDP if the rise was capped at 6 degrees Celsius (10.8 degrees Fahrenheit).
The Parasol Lost report determined that, in fact, a 15% to 20% reduction of global GDP is likely over the course of five years, and that Earth is heating more quickly than previously predicted, with the increase predicted to hit 2 degrees Celsius (3 degrees Fahrenheit) by 2050 and keep rising.
Why are these findings important?
Many who dismiss the idea of climate change do so because they think it's just about warmer weather or far-off plants and animals that don't affect them. Unfortunately, even politicians and financial decision-makers fall into this trap. However, the Earth's rising temperature has real, material impacts on everyday people and global economies.
The economic impact of our changing climate is going to be much bigger than analysts originally thought, partly because it's getting hotter faster than they expected, and partly because of the way that the rising temperatures impact the environment.
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Rising sea levels cause damage along coastlines, while more acidic oceans affect fishing. These temperature increases are tipping points that affect everything from forest to ice caps and human health.
"Planetary Solvency is threatened, and we urgently need a recovery plan," said Sandy Trust, lead author and Sustainability Board member of the IFoA, per Green Futures Solutions.
"An actuarial review of key climate change assumptions shows we may have seriously underestimated the rate of warming as well as the related economic impacts. Unless we rapidly change course, climate damages will start to impact growth and future prosperity.
"The parallels between the risk management failure of the Global Financial Crisis and inaction on the major systemic risk posed by climate change are clear. Both feature an over reliance on benign risk model results and a failure to understand systemic risk."
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$200 or more 💰 How this report helps the world plan ahead
If governments were to put policies in place now to reduce pollution dramatically, it would still be possible to reduce the use of dirty energy sources and switch to less polluting options that are also more affordable.
This would not only lower costs for everyday citizens, but it would also protect the climate in the long run.
After key clean energy budgets in the U.S. were slashed, it will take a reversal of policy to make these changes.
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