Climate change costs much to global middle class
2015 has been one of the costliest disasters years ever recorded, Swiss group UBS highlighted in a report measuring the impact of climate change and its effects on the global middle class.
In the first six months, natural catastrophes have caused 16,200 fatalities and total economic losses of $32 bn of which $12bn were insured. “The five costliest events were winter storms in the United States, Canada and Europe”, UBS specified.
In order to assess how climate change is impacting the middle class, UBS looked at middle-class consumption in 215 cities around the world and compared consumption patterns to the level of climate-change risk in those cities.
The research finds out that cities facing a higher climate change risk, such as Los Angeles, Tokyo and Shanghai, spending priorities are different, with the middle class spending between 0.6 and 0.8 % more on housing when compared to the respective national average.
It also reveals that US middle-class households living in high climate-change risk cities spend between $800 and $1,600 more annually on housing compared to those living in a lower risk city.
They spend proportionately less on luxuries, entertainment and durable goods, the study points out. However, expenses related to communication, education, clothing and health are “still largely unaffected by climate change”.
If UBS’ research does not include property insurance in its mechanism, it recalls figures provided by reinsurer Swiss Re estimating total global economic losses from natural disasters have averaged around $180bn annually in the last decade (2005-2015), of which 70% is uninsured ($127bn per year, or $1.3trn over the 10 years).
Another estimate by Munich Re the report highlights shows only 9% of losses in Asia have been insured from 1980 to 2014. Also one-third of weather related losses in the United States are uninsured bringing the total sum of damages to $1.5trn in total economic losses from 1980 to 2014
Commenting on the report, Caroline Anstey, UBS group managing director and global head, UBS and Society, said: “Climate change is already having a real and significant impact on the global population, and conditions are only predicted to worsen over time.
“UBS is committed to combating the effects of climate change for the good of the global community and economy.”
Paul Donovan, global economist and managing director of UBS Investment Bank, said : “The middle class has two important qualities that make them critically important to the conversation about climate change: substantial assets and political influence.
“If the effects of climate change significantly hurt the middle class, the inevitable reaction should in turn elicit a strong response from policy makers. It is a big reason why the latest United Nations Framework Convention on Climate Change (UNFCCC) agreement in Paris was signed by all 196 participating countries – the threat is real.”
To read the full report : https://www.ubs.com/microsites/climatechange/en/home.html