Philippines, Asia Pacific Most Vulnerable To Climate Hazards,Study Reveals; Expect Severe Thunderstorms

Tropical cyclones, severe thunderstorms, and floods have had the greatest impact in the Philippines, and these threats are expected to worsen.

Economic Loss Due To Climate Hazards

A recent study shows that climate change will be the primary driver of future economic hazards, with Asia-Pacific countries being among the most vulnerable to catastrophic weather events.

According to a report by the Swiss Re Institute, the research arm of global insurance business Swiss Re, four weather risks-floods, tropical cyclones, winter storms, and severe thunderstorms-account for the majority of economic losses from natural catastrophes around the world.

Of the 36 countries studied, the Philippines is the most affected by weather hazards.

This causes the Philippines to incur annual economic losses (based on property destruction) of 3% of GDP, which is eight times greater than any other country.

The United States and Thailand are the next worst affected, with GDP losses of approximately 0.4%. Other Asia-Pacific countries on the list include China, Taiwan, India, and Japan, all of which have had GDP losses of at least 0.2%.

Tropical cyclones are the leading cause of weather-related economic losses in east and southeast Asia.

"The most recent example is Typhoon Haikui which caused widespread devastation in China, Hong Kong, Taiwan and the Philippines in early September 2023," said Jérôme Jean Haegeli, group chief economist at Swiss Re.

The report is based on scientific findings from the Intergovernmental Panel on Climate Change (IPCC) on the likelihood of more severe weather in various nations, as well as Swiss Re's insurance knowledge of property loss caused by natural catastrophes.

According to the report, the four primary weather risks alone are predicted to cause economic losses of $200 billion per year.

Risk Mitigation Through Lower Emissions

The research emphasizes that risk mitigation through lower emissions and adaptation measures, such as enforcing construction codes, strengthening flood protection, and discouraging settlement in natural disaster-prone areas, are critical to mitigating the economic implications of global warming.

The Paris Agreement aims to keep global temperature rise this century to well below 2 degrees Celsius above pre-industrial levels while also pursuing efforts to limit the increase to 1.5 degrees Celsius.

According to the Climate Action Tracker, emissions are expected to climb until 2030, putting the globe on track for 2.7 degrees Celsius of warming by 2100.

If global warming continues at its current rate, Swiss Re's 2021 report estimates that the world will lose 7-10% of its GDP by 2050.

The study argues the case for spending large financial resources on climate change mitigation and incorporating private-sector money into the financing solution.

"In 2022, we estimated a cumulative global investment gap of more than US$270 trillion (US$9.4 trillion annually) to bring about the economic transformation that would deliver net zero emissions by 2050," said Haegeli.

According to the World Bank, private investment now accounts for less than 2% of global adaptation financing.

Climate change mitigation is a worldwide public benefit, and there are limits to how much of the deficit can be funded by the government, Haegeli added.

The report also noted that countries such as China, India, Indonesia, Thailand, and the Philippines have significant insurance coverage gaps and are therefore likely underprepared to deal with the financial consequences of increasingly severe weather shocks in the future.

In 2022, 86% of Asian catastrophe damages were uninsured.