Economic Impacts

According to a report in LiveScience in November 2005, insurance companies are starting to take notice of the destructive effects of global warming. As property damage occurs from flooding, rising sea levels, hurricanes, severe weather, and other global warming-related events, insurance companies will be increasingly called upon to compensate property owners for destroyed property. Health insurance companies will be faced with the same issues as people are injured in violent weather events or suffer from heat waves, allergies, infectious diseases, and starvation. As more people are affected, insurance companies will be harder hit to bear the financial burden of global warming.

One insurance company, Swiss Re, which had a study conducted by the Center for Health and the Global Environment at Harvard Medical School and also sponsored by the United Nations Development

Program, issued the comment: "Climate change will significantly affect the health of humans and ecosystems and these impacts will have economic consequences."

Through the completion of 10 case studies, they found that climate change will have multiple effects from challenges such as infectious diseases (malaria, West Nile virus) to severe and extreme weather events such as hurricanes, heat waves, and floods. Changes to a multitude of different land-use types were analyzed, such as forests, deserts, agriculture, range, and marine habitat. A range of cause-and-effect issues were considered that had direct implications for insurance companies.

According to Dr. Paul Epstein, the associate director of the Center for Health and the Global Environment at Harvard Medical School, "We found that impacts of climate change are likely to lead to ramifications that overlap in several areas including our health, our economy, and the natural systems on which we depend. Analysis of the potential ripple effects stemming from an unstable climate shows the need for more sustainable practices to safeguard and insure a healthy future."

In the study, economic implications and future impacts were analyzed in 10 different case studies. Issues were taken into consideration, such as ragweed pollen growth being accelerated by increasing levels of CO2 in the atmosphere, which may be contributing to the documented rising in asthma cases. Swiss Re, the insurance company instigating the study, has been concerned about the insurance costs of global warming since 2003 and is concerned about the economic implications in the future.

Jacques Dubois of Swiss Re says, "Whereas most discussions on climate change impacts home in on the natural sciences, with little to no mention of potential economic consequences, this report provides a crucial look at physical and economic aspects of climate change. It also assesses current risks and potential business opportunities that can help minimize future risks."

As portrayed in this chapter, the human element is playing a significant role in global warming, and its contribution has the potential to affect millions of people worldwide. Unless it is controlled and slowed considerably, the physical, economic, and health effects have the potential to be globally devastating.

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