Science says climate change will cost investors up to $30 trillion

Kiama, NSW, last year. Mark Nolan/Getty Images

Scientists have for the first time estimated the potential costs of climate change for global financial assets including stocks and bonds.

Continuing to pump out CO2 at current rates would wipe out at least $3 trillion from the market. But the situation could be much worse with the upper estimate for losses at $30 trillion.

The study published in the journal Nature Climate Change says that policies to prevent temperatures rising by more than 2 degrees Celsius above pre-industrial levels substantially would reduce the risk.

Previous research has shown that policies to limit emissions and pollution may strand some assets such as oil, coal and gas reserves. These will lose value.

However, climate change can directly destroy capital assets through damage from extreme weather events or reduce productivity.

Simon Dietz of the London School of Economics and colleagues modelled the impact of climate change on global economic growth and the value of global financial assets.

They estimate that a business-as-usual emissions path will put 1.8% of the present market value of financial assets at risk.

That is equivalent to $US2.5 trillion ($3 trillion) or about half of the estimated current total stock market value of fossil-fuel companies.

However, up to $US25 trillion ($30 trillion) of assets could be at risk if climate change is worse than expected.