Climate Change: Facing The Economic Impact

Climate Change Facing The Economic Impact

Although they might seem distant, the effects of climate change filter down to affect core systems forming parts of our daily lives. From agricultural supply chains to product pricing, greenhouse gas emissions and rising temperatures pose a significant threat.

In this guide, we’ll cover some of the ways in which climate change manifests and carries financial impacts on a domestic and an industrial scale across the UK.

What’s climate change all about?

The latest State of the UK Climate report from the Met Office revealed that the 21st century has so far not only been warmer than the past three centuries, but has also seen an overall decline in snowfall. 

With recent decades being notably warmer, wetter, and sunnier, experts are concerned about these insights into the risks of increasingly extreme conditions. 

It’s impossible to narrow down a sole cause for these changes. While households in the UK remain the highest contributors to nationwide greenhouse gas emissions, the energy industry plays an enormous role on a global scale, largely down to the burning of fossil fuels. So, what is the daily cost of climate change?

Coping with extreme weather

While the UK doesn’t experience the same devastating tropical cyclone conditions seen in the Americas, existing climate change data shows a clear pattern of worsening, wetter weather – so it’s best to be prepared.

If we continue to see more frequent extreme weather conditions, we can expect to see a rise in the cost of certain insurance policies. If you already live in an area at risk of flooding, it could be a sensible idea to reconsider your existing home insurance to keep in the loop. 

Rising food and produce prices

Collectively, food systems are responsible for 23% of greenhouse gas emissions, with the bulk originating from land use – such as turning forests into farmland. 

Climate change is highly likely to be a contributing factor to future food insecurity, mostly because of increasing food prices combined with reduced rates of food production. 

While gradual temperature and carbon dioxide increases could boost yields for certain crops, many regions also carry the risks of devastating, extreme conditions.

Changes in corporate investment

Climate change could even be a risk to your savings, especially if you’re holding cash in the stock markets. Certain risks to financial stability posed by climate change could be overlooked.

ESG funds – those prioritising either environmental, social or governance criteria in decision making – are worth keeping an eye on, with pressure increasing on institutional investors to adjust to new likelihoods of extreme weather events.

Overall, it’s wise to make sure you’re aware of the financial impact of climate change – especially if you’re expecting to move house or if you’re planning a major new investment.