South Asia is the most economically exposed region with 12 per cent of its GDP at risk.
This will test countries’ adaptation plans, particularly those of lower-income nations that are disproportionately exposed and less able to prevent permanent losses, the rating agency said in a research note.
If global warming does not stay well below 2 degrees Celsius by 2050, up to 4.4 per cent of the world’s GDP could be lost annually, absent adaptation, according to S&P Global Ratings.
South Asia is the most economically exposed region with 12 per cent of its GDP at risk.
Lower-income countries are 4.4 times more exposed to climate risks than wealthier peers.
The GDP at risk measure is based on a static view of the economy, assuming no adaptation and that all hazards occur in one year in all exposed places.
The rising likelihood of compound climate events adds to the challenges of climate analytics. Understanding these non-linear dynamics appears crucial to assessing specific risks each country faces and may help policymakers pursue more-targeted policies, it said.
The adaptation gap is widening, given slow progress on preparedness, and financing conditions are tightening.
Financing rising adaptation costs as the impacts of climate hazards worsen may become more difficult in an environment of higher interest rates, adding another hurdle to developing countries’ adaptation implementation, the research note observed.
Water stress and extreme heat are climate hazards responsible for the majority of potential economic losses.
Lower-income countries are 4.4 times more exposed to climate risks than their wealthier peers.
The Sub-Saharan Africa region is the least prepared to face those losses with the lowest readiness assessment.
Fibre2Fashion News Desk (DS)
