Extreme Weather Costs Reach $US2 Trillion Over the Past Decade

A new report commissioned by the International Chamber of Commerce (ICC) reveals that extreme weather events have cost the global economy $US2 trillion over the past decade, with the United States bearing the highest losses at $US935 billion, followed by China and India. The report highlights the sharp rise in economic damage from extreme weather such as hurricanes, floods, and wildfires linked to climate change, including $US451 billion in losses over the last two years alone. 

The warming of polar regions, especially in the Arctic, has contributed to an increase in extreme global weather events through rising temperatures as well as through disruptions to oceanic and atmospheric currents. Furthermore, Arctic amplification amplifies warming by greenhouse gas emissions, which contributes to the weakening of the polar jet stream. This can lead to prolonged weather patterns, such as extreme temperature swings (e.g. heatwaves and cold snaps) and precipitation patterns (e.g. drought and intense rainfall) in mid-latitude regions. Additionally, the loss of sea ice allows the ocean to absorb more solar heat, intensifying weather systems like storms and hurricanes across various parts of the world. 

Melting ice sheets in Greenland and Antarctica contribute to rising sea levels, worsening coastal flooding and increasing storm surges. Thawing permafrost in the polar regions also releases greenhouse gases, which accelerates global warming and further fuels extreme weather conditions. These interconnected effects of polar warming, ranging from disrupted jet streams to ocean warming and rising sea levels, make extreme weather events such as hurricanes, floods, droughts and heatwaves more severe and frequent, with widespread impacts on ecosystems, infrastructure, socio-economic systems, and human health. For example, in the United States, about 25% of all vital infrastructure, is currently at danger of flooding-related closure. Similarly, 17% of social infrastructure and 23% of road segments (over 2 million km) are at risk of flooding-related operating issues. An additional 63,000 miles of roads, 6,100 social infrastructure facilities, and 2,000 pieces of key infrastructure are anticipated to be affected by flood threats, rendering them unusable or inaccessible, as the situation is predicted to get worse over the next 30 years. 

The release of this ICC report on global extreme weather costs coincides with the ongoing COP29 summit, where international leaders are discussing climate finance responsibilities. John Denton, ICC’s Secretary-General, emphasized that extreme weather already disrupts the global economy, underscoring the urgent need for developed nations to aid vulnerable countries in building resilience and adapting to climate change. Small island nations like Saint Martin and the Bahamas also saw the largest economic losses per capita. While the figures in the report primarily reflect financial damages in high-income countries, experts caution that the numbers may underestimate true impacts in low-income regions, where data gaps remain. 

Feature image: Distribution of number of reported deaths by region, Credit: Oxera analysis of EM-DAT dataset 

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