Climate change is putting increasing stress on the world’s resources, raising risks to the global economy and to global energy, food and water systems.
HSBC has analysed the risks from climate change to G20 countries and it has found the financial damage from floods, droughts, extreme temperatures and fires is large.
The estimated damages bill from climate change is $US309 billion for G20 countries for the decade to 2014 with 39% of that in China, followed by the US (22%) and India (11%).
“In our view, assessing country vulnerability to these stresses enables superior investment decision making,” HSBC says in its study Scoring Climate Risk.
“We expect asset managers and owners to develop strategies to account for the impacts of climate change. This report shows investors where the relative risks are likely to be felt harder.”
As average temperatures increase across the globe, HSBC says water stress is increasing with Australia and Saudi Arabia posting the largest deterioration in water availability.
On average, G20 water resources have fallen 1.5% compared to HSBC’s 2013 analysis.
HSBC says the dominance of floods and droughts illustrates how changing rainfall patterns are currently the driver for a major component of total extreme weather events and associated costs.
“We expect flooding to become more common as climate impacts increase,” HSBC says.
The number of extreme weather events is increasing. This chart shows how droughts, extreme temperatures, floods and wildfires are rising.
India, China and Indonesia are the three most vulnerable G20 countries to climate change risk.
Australia sits at 13th place. Here’s the full ranking: