In its annual report, the World Economic Forum (WEF) has named climate change as the most severe global economic risk of 2016. According to an article in Scientific American (reprinted from Climatewire), the WEF has labeled climate change or related environmental phenomena—extreme weather, major natural catastrophes, mounting greenhouse gas levels, water scarcity, flooding, storms and cyclones—among the top five most significant economic threats in every report since 2011. However, this is the first time since the WEF began issuing reports in 2007 that an environmental risk tops the list.
The WEF report paints a grim picture. North America’s eastern seaboard, East Asia, Southeast Asia and the South Pacific are particularly exposed to extreme weather patterns and natural catastrophes. Global climate change threatens top producers of wheat, corn, rice and other agricultural commodities. Recent years illustrated the “climate vulnerability of G-20 [Group of 20] countries such as India, Russia and the United States—the breadbasket of the world.” Climate change is compounding and amplifying other social, economic and humanitarian stresses globally. It is linked to mass and often forced migration; violent conflict between nations and regions; water crises; and, as the world population rises and simultaneously gets hotter, food shortages, the report reads.
Fortunately, there is mounting evidence that the business world is taking notice. Following the worldwide financial meltdown of 2008, the people the WEF surveyed listed the collapse of investment prices as the most likely and most grave hazards. That trend has shifted, and the increased focus on environmental concerns indicates that the private sector is beginning to acknowledge the severity of this economic risk. Since the climate talks in Paris, economists, regulators and financial experts have also become more vocal about climate risks, calling for vigilance and pledging financial support to climate mitigation projects. Some even expressed optimism that this new focus will remain on an upswing for the foreseeable future.
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