WEF sees global warming as main risk to global economy

The World Economic Forum has warned that the effects of climate change potentially represent the greatest threat to the global economy over the next decade.

Global Warming
In its Global Risks Report 2016, based on a survey of almost 750 experts from around the world, natural disasters related to climate change; the influx of immigrants into Europe and elsewhere; the rise of so-called Islamic State group; and increasingly sophisticated cyber attacks were all identified as immediate threats this year.In the longer term, the report said that global warming, with temperatures now already one degree Celsius above pre-industrial levels, could do more damage than weapons of mass destruction, water crises, large-scale forced migration or severe energy price shocks over the next 10 years. It is the first time environmental concerns have topped the report's threats to the global economy."Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker social cohesion and increased security risks," said Cecilia Reyes, chief risk officer at Zurich Insurance, which helped develop the report."Meanwhile, geopolitical instability is exposing businesses to cancelled projects, revoked licences, interrupted production, damaged assets and restricted movement of funds across borders."These political conflicts are in turn making the challenge of climate change all the more insurmountable – reducing the potential for political co-operation, as well as diverting resource, innovation and time away from climate change resilience and prevention."However, the report was based on a survey carried out before the global warming targets agreed in Paris in December and John Drzik, president of global risk at insurance broker Marsh, which also helped compile the report, conceded that climate change might not have topped the list if the survey had been conducted after the agreement.He said that this year's report identified the broadest array of risks facing the global economy in the survey's history."Events such as Europe's refugee crisis and terrorist attacks have raised global political instability to its highest level since the Cold War," Mr Drzik said.Throughout the report, the interconnectedness of all the risks was repeatedly emphasised. "We know climate change is exacerbating other risks such as migration and security, but these are by no means the only interconnections that are rapidly evolving to impact societies, often in unpredictable ways," said Margareta Drzeniek-Hanouz, the WEF's head of global competitiveness and risks.The survey said that large-scale involuntary migration, affecting not just Europe but many other regions, could emerge as the biggest threat to economies – and social stability – across the world this year. The scale of the slowdown in China, high unemployment levels in many countries, and the impact of low oil prices on the budgets of oil exporters were among other risks identified in the report.But the report also said that, while 2016 might be a difficult year for many economies to navigate, there were opportunities within the challenges with, for example, climate change stimulating technological innovation."Let's not forget the risks and the rewards. They're two sides of the same coin," said Ms Reyes.For more Re:locate news and features on the global economy, click here and for more on international assignments, click here