Losses from extreme weather could top $1 trillion in a single year by 2040, a partnership of the United Nations Environment Programme and private finance institutions (UNEP FI) warned on Tuesday.
NAIROBI Losses from extreme weather could top $1 trillion in a single year by 2040, a partnership of the United Nations Environment Programme and private finance institutions (UNEP FI) warned on Tuesday.
Speaking at a major U.N. climate meeting in Kenya, they said the estimated cost of droughts, storm surges, hurricanes and floods reached a record $210 billion in 2005, and such losses linked to global warming were seen doubling every 12 years.
"This is an unequivocal statement by 15 of the largest financial institutions: Climate change is now certain," Paul Clements-Hunt of UNEP FI told a news conference.
"In one scenario, potential disaster losses are calculated at more than $1 trillion in a single year by 2040... It is one of many scenarios, but the process was robust and the institutions felt comfortable it was a realistic scenario."
The new report was modelled by Andlug Consulting for UNEP FI's Climate Change Working Group, whose members include Dresdner Bank, Bank of America, Swiss Re, UBS and HSBC.
The Andlug study said it seemed likely there would be a "peak year" of losses of more than $1 trillion before 2040.
"Since so much development is taking place in coastal zones the figure may arrive considerably before 2040," it said.
Munich Re, which is also a member of the Working Group and has been tracking natural disaster costs for more than 50 years, said losses in 2006 -- some $30 billion so far -- were not going to approach the record levels of the year before.
"But the industrialised world still came away with a black eye," said Thomas Loster, chairman of the Munich Re Foundation.
Typhoon Kaemi struck China in July causing losses of some $9 billion, Loster said, while Typhoon Shanshan hit Japan in September costing an estimated $2.5 billion in total losses.
UNEP chief Achim Steiner said aid budgets could not cope with the burden of increasing natural disasters, and governments needed to study public-private partnerships to insure against weather events worsened by climate change.
If the scenario of $1 trillion-plus losses seemed too high, he said, people should remember Hurricane Katrina, which caused losses in excess of $120 billion in August 2005.
"And that was just a 12-hour event in one location on the planet," Steiner told reporters. "This is not an environmental doomsday scenario. This is simple, empirical work done between UNEP and the financial services sector."