The organization Finance Watch warns against underestimating the effects of climate change on the economy and the financial system. Economists modeled climate risk in the same way as traditional financial risk, according to a report published in Brussels. “This means that economic models do not take into account the fact that damage from climate change will be extraordinarily large, unpredictable and permanent,” it said.
More than three billion people affected
Climate scientists warned of tipping points such as melting of permafrost at global warming of around two degrees Celsius and catastrophic consequences at more than three degrees Celsius. “If temperature rises reach these levels, it will have a devastating impact on the more than three billion people living in conditions that are extremely vulnerable to climate change,” the experts said.
Looking at the numbers, an unprecedented economic collapse seems inevitable. “But the current figures assessing the impact of climate change on the economy and the financial world paint a strangely positive picture,” it said. Reaching tipping points could increase damage to levels well above those of recent financial crises, it said. But conservative figures led to inactivity in political decision-making circles, according to the authors.
“Accomplice of inactivity”
Thierry Philipponnat, an expert at Finance Watch, said: “Economists analyzing the impacts of climate change must not become complicit, even involuntarily, with the inaction of policymakers.” Producing biased analyzes that underestimate future costs is no longer an option.
For the report, the experts examined economic models created by financial regulators and their consistency with the results of the climate science literature. Finance Watch, based in Brussels, is a European non-governmental organization that sees itself as a counterforce to the financial lobby. According to her own statements, she is committed to ensuring that the financial world works for the good of society.
