Climate Change Concerns: Will we be swamped by rising costs by 2045?

[$60 Billion - “The cost to insurers of natural disasters in the first half of this year, including the earthquake and tsunami in Japan, according to Munich Re (insurance company). That’s five times the average since 2001.” July 13, London Free Press]

Should we sit up and take notice, change our way of life and adopt a smaller lifestyle because the cost to insurers due to weather-related damage is increasing rather quickly?

I would say, “We need more information. I mean, 60 B doesn’t sound like a huge problem. That's less than 10 bucks per person on Earth. Surely we can scrape up that much.”

Dr. R. Nielsen writes the following:

“Only a small percentage of the losses are covered by insurance, but someone has to pay for them. E.g., only 34 per cent of Australia’s weather-related losses in 1998 were covered. In that year only 29 per cent were insured on the continent of America, 27 per cent in Europe, 7 per cent in Africa, and 4 per cent in Asia.” (pg. 103, The Little Green Handbook)

In other words, when we read that the 2011 earthquake and tsunami cost insurers 60 B, the actual cost to the population was much higher. More than 10 bucks per capita.

Nielsen would agree, and writes, “According to Munich Re... losses per decade increased from $86 billion for 1980 - 89 to $474 billion for 1990 - 99... global weather-related losses covered by insurance increased from $26.2 billion for the 1980 - 89 decade to $123.5 billion for 1990 - 99. These data show that, on average, only 26 per cent of weather-related losses were insured.”


["Curves cross in 2045. What to do?": photo GH]

So, should we sit up, adopt a smaller lifestyle asap because the cost of weather-related damage is increasing rather quickly, or just let things ride as we usually do?

Dr. Nielsen writes, “If global income is substantially greater than the losses, and if it increases at least as fast as the losses, we have nothing to worry about. There will always be enough money to repair the damage.”

My spider senses warn me there is another shoe about to drop.

He continues: "...the prospects are not encouraging, because the losses are increasing much faster than income. As we have seen, global weather-related losses per decade increased... 450 per cent in the last two decades of the 20th century. However, GWP (gross world product) increased... 33 per cent during the same period. GWP is still greater than the weather-related losses, but the losses are increasing much faster... the two calculated curves cross in 2045. If about that time we decide to repair the damage there will be no money left for anything else.”

That’s quite a big shoe, financial tsunami, even moral dilemma.

If Nielsen’s calculations are correct, or even close, then the answer to my original question [Should we sit up and take notice, change our way of life and adopt a smaller lifestyle?] has to be “yes.”

Live small and prosper.

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