The economies of the European Union and the United Kingdom could face almost one trillion euros in lost productivity and damages from predicted sea level rise by the turn of the next century, a new study reports.
In the study, the researchers from across the continent assumed a base 2% annual GDP growth per year along with current estimates for sea level rise, and then applied an analysis that factored in the loss of stock and productive capacity of all capital assets in potentially flooded areas based on the distribution of economic losses caused by 155 flooding events from 1995 to 2016.
The team then assumed the relocation of human and capital resources to productive inland areas like Germany and Austria, and quantified the overall cost of the phenomenon as around €872 billion, and 1.26% of continental GDP loss. Some specific regions, like Veneto and Emilia Romagna in Italy, could suffer GPD losses of as much as 21%, while inland areas receiving the refugee business and capital could see a GDP increase of a little over 1% more than expected.
The whole exercise is one of many that demonstrate how the cost of climate change in GDP or currency terms is simply not that impactful, and certainly not as impactful as wars or financial crises, as WaL has reported before.
The European Union lost around 0.9% GDP growth in 2022 in the wake of the historic energy shock from the war in Ukraine. The zone finished the year between 3.1% and 3.2% GDP growth, but is predicted to conclude 2023 at 0.6%. Important to remember is that the oil price cap and similar measures imposed by the Union on Russia only really took effect between December 2022 and January 2023, or 10 months after the war had started. The drop would undoubtedly involve the end of COVID-19 measures, but these prints put the GDP loss in Europe from the war in Ukraine and the policy responses to it at somewhere higher than 0.9%.
Similar losses may occur from the oil and trade disruptions ongoing in the Red Sea due to Israel’s siege of Gaza.
The Suez Canal accounts for 10-15% of world trade, which includes oil exports, and for 30% of global container shipping volumes, and the Houthis, the controlling faction in the war-torn country of Yemen, have attacked enough shipping vessels in protest of Israel’s slaughter of the Palestinians to convince 6 of the 10 largest shipping companies to completely avoid the Suez Canal in Egypt which connects the Mediterranean to the Indian Ocean via the Red Sea.
President Biden has authorized 60 airstrikes in the country of Yemen in order to try and counter the Houthis’efforts but admitted they were neither working nor going to stop.
When asked by a reporter if his strikes against the Houthis were working, the president responded: “Well, when you say ‘working’ — are they stopping the Houthis? No. Are they going to continue? Yes”.
1 single year of the war budget
Speaking of US militarism, the figure of €872 billion in lost capital from sea level rise of 75 years, amounts to around a single fiscal year of US military expenditure.
With the most recent year coming in at $874 billion, one might note that the conversion of euro to dollar would take the former over the latter, but the National Defense Authorization Act (NDAA) aka the military budget, is always higher than the bottom line because of the inclusion of the “unfunded priorities list” or “wishlist” of things the Pentagon wants but doesn’t feel is imperative.
The figure is also typically added up courtesy of news agencies who combine spending for international espionage and intelligence, the maintenance and procurement for the nuclear arsenal which is nested in the Department of Energy Budget, and some, such as WaL will include the State Department and USAID because their budgets are authorized in the NDAA.
Typically, the most committed warhawks in Congress have argued that an annual increase, without specific appropriation in mind, of between 3 and 5% is necessary in the NDAA in order to ensure that spending outpaces inflation.
Core Producer Price inflation, which would seem relevant for arms manufacturing, was 3.3% year over year in the month that Biden passed the previous NDAA for this fiscal year, while Core Consumer Price inflation was 5.6%. Assuming a scenario where Core Consumer and Producers increased by smaller amounts on their current trajectories, it would put price inflation for buyers in the weapons industry somewhere between 1.6 and 2.8% year-over-year.
If the rise in the NDAA were to match an average of those two figures over the next ten years the US would be spending an additional $272.6 billion on defense annually.
When WaL last reported on the economic analyses of the worst effects of climate change in circumstances without emerging technologies, the conclusion was that according to the most current published estimates, it’s potentially a tolerable cost of doing business for Western high-income countries. This latest study shows that, as intolerable as the costs of sea level rise might be to private firms with limited means, it may not be seen as impactful—coming 70 or 65 years in advance of the next election cycle—to those who control the income from the tax base. WaL
PICTURED ABOVE: The Perito Moreno glacier calving. PC: NASA Goddard Space Flight Center, CC 2.0. Flickr.