Economic damage due to climate change could cost 13.6% of GDP by 2040 — World Bank report

Climate change can take a heavy toll on the country’s economic progress in the next decades if left unaddressed, according to the World Bank Group’s Country Climate and Development Report (CCDR) for the Philippines released on Wednesday.

In its report, the World Bank said that using historical typhoon information to calibrate a catastrophe risk model to estimate the destructive potential of future events on the economy, the average estimated loss of gross domestic product (GDP) by 2030 is at least 3.2%, rising to at least 5.7% by 2040.

“However, the impacts could be much worse, reaching 7.6% of GDP by 2030 and 13.6% by 2040,” the World Bank said.

The multilateral lender said that rising temperatures and changing rainfall patterns will likely have negative impacts on human health and labor productivity and reduce many crops’ yields.

Most importantly, the multilateral lender said the frequency and severity of typhoons are likely to increase, with higher damage costs.

The World Bank said climate change will affect all sectors, particularly capital-intensive sectors such as energy and manufacturing.

Without adaptation measures, climate change is also seen to increase poverty rate by nearly a percentage point as well as economic insecurity by 3.3 percentage points and inequality by 0.3 percentage points, according to the report.

“In 2040, consumption by the richest 20% of people will decline by 6–7% compared to a scenario without climate change. Poorer households will experience a greater decline of more than 7.5% for the entire bottom half of the distribution, and of more than 8 percent for those in the lowest decile,” the bank said.

The World Bank recommended the following to adapt and mitigate the impact of climate change:

• Avoiding new construction in flood-prone areas
• Improving water storage to reduce the risk of damaging floods and droughts. This will also increase water availability
• Extending irrigation in rainfed areas and promoting climate-smart agriculture practices such as Alternate Wetting and Drying (AWD)
• Making social protection programs adaptive and scalable to respond to climate shocks
• Removing obstacles that private actors face in scaling investments in renewable energy
• Ensuring new buildings are energy efficient and climate resilient

The bank said adaptation measures can reduce economic losses from climate change by around two-third.

Likewise, the World Bank said that “measures to mitigate GHG (greenhouse gas) emissions in the Philippines could thus boost the economy through the stimulus effect from the required investments.” — RSJ, GMA Integrated News