Future proofing the world from climate change

The Forum:Blog has prepared a special series on “Resilient Dynamism”, the main theme of 2013’s Annual Meeting in Davos, Switzerland. Dominic Waughray, Senior Director and Head of Environmental Initiatives at the World Economic Forum, explains the economic risks of climate change.

According to the World Meteorological Organization (WMO), 2010 was the warmest year since accurate records began in the late 1800s. The following year, 19 nations set all-time extreme heat records. Based on records from the US National Oceanic and Atmospheric Administration (NOAA), 2011 was also the 35thconsecutive year since 1976 that the yearly global temperature was above average.

The wettest year on record in 2010, followed by 2011; 2012 is following a similar pattern of “weather weirdness”.

Hurricane Sandy fits into this pattern, which is expected to cost the US up to US$ 20 billion in property damage and up to US$30 billion more in lost business, says IHS Global Insight. The storm cut power to about 7 million homes, shut down 70% of East Coast oil refineries and inflicted worse-than-expected damage in the New York metro area, an area that produces about 10% of the US economic output.

Neither Hurricane Sandy nor other natural disasters can be unequivocally attributed to climate change. However, the risks of such extreme weather events are forecast to increase with climate change.

A report by the Intergovernmental Panel on Climate Change (IPCC) in April 2012 said it is likely that a 1-in-20 year hottest day is likely to become a 1-in-2 year event by the end of this century in most regions of the world, and the frequency of heavy precipitation or the proportion of total rainfall from heavy falls will likely increase during the century over many areas of the globe. Heavy rainfalls associated with tropical cyclones are likely to increase with continued warming.

The international reinsurance company Swiss Re estimates the average weather-related insurance industry loss in the US was about US$ 3 billion a year in the 1980s compared to about US$ 20 billion annually by the end of the past decade. Allianz sees a 15-fold increase in weather-related claims over the past 30 years.

For many who analyse the economic risks of weather related impacts, there is already an increasing sense of urgency to “future” proof our key economic sectors and supply chains. We will need plans to manage what may be some unavoidable impacts from increasing climatic variability. This will include protecting our economic prospects by strengthening the resilience of our energy and agriculture systems as well as infrastructure and water resources.

In these times of fiscal constraints, however, dynamic partnership between the public and private sector is required to help finance these plans. The World Economic Forum’s Green Growth Action Alliance is one such public-private mechanism designed to do exactly this. Borne out of discussions at the G20 in 2012 and chaired by Felipe Calderon, the former President of Mexico, this alliance brings together policy and finance specialists from across global institutions, national governments and leading companies.

Through the power of example, the alliance is developing a set of innovative solutions for developing countries that use limited amounts of public finance and the balance sheets of large corporations and public institutions to help mitigate key risks and attract private investors into the “future proofing” market for energy, agriculture and infrastructure.

Leaders from governments, international organizations and the private sector will meet during the World Economic Forum’s Annual Meeting in Davos to discuss this work and agree on a practical agenda for the year ahead. The Green Growth Action Alliance is truly a multistakeholder example of “dynamic resilience” in action.

About Resilient Dynamism
To be resilient is to be able to adapt, withstand shocks and recover from them. Future growth in this new context requires dynamism – bold vision and even bolder action. As the theme of 2013′s World Economic Forum’s Annual Meeting in Davos, Resilient Dynamism refers to these combined attributes as fundamental concepts for leadership in coming years.

Author: Dominic Waughray is Senior Director, Head of Environmental Initiatives, at the World Economic Forum.

 Image: Firefighters look at flood waters left from Hurricane Sandy in New York REUTERS/Keith Bedford