Analysis: Economy, Environment Merge to Speed Global Decline

Economic collapse and then global warming will catch us off guard, experts fear. Analysis shows negative feedback loops are already at work.

Economic Losses Related to Natural Catastrophes in 2011

Experts perceive “major systemic economic failure” and “failure of climate change adaptation” as two of the most systematically critical global risks for the next ten years, says the World Economic Forum (WEF) in its annual Global Risks Report. Finding that environmental and economic systems are highly correlated and interdependent, the report highlights the relationship in a case section titled “Testing Economic and Environmental Resilience.”

WEF frames its survey results as an urgent message: “like a super storm, two major systems are on a collision course,” the report warns. Referencing a 2011 Mercer study, the report estimates that climate change will cumulatively issue a $2–$4 trillion blow to global health and infrastructure investments by 2030. So far, international policies have committed only $100 billion for adaptation and damage costs. Meanwhile, both advanced and developing economies are projected to see slower growth, and massive debt has introduced unprecedented levels of fiscal fragility.

 

Interconnected Global Risk Map

A network analysis—where relationships between risks were determined by experts rating pairs of challenges as highly interconnected—revealed that declining economic and environmental systems are correlated. WEF says this correlation currently manifests itself in a daunting negative feedback loop (a vicious cycle of problems reinforcing one another). Efforts to avert climate change are hindered by limited public resources, but the longer decision-makers wait, the more it will cost. The report notes the increasing difficulty of implementing international climate-change mitigation agreements since the economic slow-down.

The report points to the private sector as an untapped source of funding and innovation. In the U.S., where 80% of the nation’s critical infrastructure is in private hands, public-private collaboration will be essential to protecting the nation’s assets, according to the report.