LONDON: In an exploratory scenario analysis of the vulnerability and readiness of 135 countries to climate change, S&P Global Ratings finds that physical climate risks could expose 3.3%, 4%, and 4.5% of world GDP to losses by 2050 under climate pathways RCP2.6 (Paris Agreement), RCP4.5 (current policies), and RCP8.5--assuming no adaptation and that all risks materialize simultaneously.

The analysis published today, "Weather Warning: Assessing Countries’ Vulnerability To Economic Losses From Physical Climate Risks," also finds that vulnerability and readiness to face those risks vary widely by region and country:

  • Our vulnerability assessment shows that regional impacts from climate hazards differ and are most pronounced in South Asia (10%-18% of GDP at risk) and is high for Central Asia, Middle East and North Africa, and Sub-Saharan Africa. Acute risks like storms, floods, and wildfires are likely to prompt the greatest GDP losses, followed by water stress and heat waves.
  • Our economic loss estimates show that lower- and lower-middle income countries are likely to see 3.6 times greater losses on average than higher-middle- and higher-income countries.

Adding to that, our readiness assessment highlights that economic losses are likely to be higher and more persistent for those same countries, which have less capacity to adapt, more precisely, weaker institutions and less financial capacity.

International cooperation and support can help the most vulnerable countries to finance a rising adaptation gap while building resilience to climate change, a problem to which they have contributed relatively little.

Given the uncertainties inherent in climate science, we do not consider this scenario analysis as part of our base case for sovereign ratings. S&P Global Ratings incorporates the adverse physical effects of climate change, where material and visible and regardless of the time horizon, into the analysis. This scenario analysis aims to provide insights into the potential exposure and readiness of different sovereigns to different types of climate risk.

The report is available to subscribers of RatingsDirect at www.capitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@spglobal.com. Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at www.standardandpoors.com. 

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PRIMARY CONTACT
Paul Munday
London
paul.munday@spglobal.com
HEAD OF CLIMATE ECONOMICS
Marion Amiot
London
marion.amiot@spglobal.com
SOVEREIGN ANALYST
Roberto H Sifon-arevalo
New York
roberto.sifon-arevalo@spglobal.com
www.spglobal.com/ratingsdirect