According to research by the Institute and Faculty of Actuaries (IFoA), climate shocks could cause a 50% GDP loss for the world economy between 2070 and 2090. Working with researchers from the University of Exeter, the IFoA emphasized the serious economic threats that ecological collapse, fires, floods, droughts, and increasing temperatures pose.

The paper described current economic projections as wildly erroneous and deceptive for policymakers, estimating that a 2% loss in world economic activity would result from a 3°C temperature increase. The authors underlined that existing evaluations of climate risk do not take into consideration tipping points, migration, war, and sea temperature changes, resulting in a failure to comprehend the significant threats to the world economy.

Potential Worst-Case Scenarios

A 3°C or more increase in global temperatures by 2050 might lead to nearly 4 billion fatalities, social disintegration, state failures, capital loss, and extinction events, the paper said. In the worst-case scenario, climate shocks could cause a 50% GDP loss between 2070 and 2090 if decarbonization and environmental restoration were not urgently implemented.

There is presently no workable plan to prevent such results, according to Sandy Trust, the report’s principal author. He contended that governments’ prevailing economic ideas overlook the dangers of environmental deterioration, comparing the situation to a possible condition of “planetary insolvency,” in which vital services for human life would cease to exist.

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Call for Paradigm Shift

The study, Planetary Solvency: Finding Our Balance with Nature, called on governments, civil servants, and political leaders to take a different tack. It demanded the creation of a global solvency risk dashboard to direct policy choices and guarantee that human endeavors stay within the planet’s limited bounds.

The authors emphasized how vital resources like food, water, and energy are provided by nature, which supports economies. Societies and economies suffer growing instability if these threats are not immediately mitigated. Co-author Professor Tim Lenton of the University of Exeter highlighted that current methods fall short in evaluating and controlling growing planetary threats, offering a guide for setting priorities for international action to stop future deterioration.

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