Water-Related Disasters May Cost $5.6 Trillion by 2050

If water-related disasters continue to wreak havoc on the world’s largest economies, $5.6 trillion in losses may result by 2050, according to a new study by GHD, which provides environmental and engineering consulting for sustainability challenges.

Worsening storms, flooding due to torrential rains, and drought are profound threats to the global economy, according to the report. By 2030, losses will amount to $1.3 trillion; by 2040, $3.3 trillion.

Become a Subscriber

Please purchase a subscription to continue reading this article.

Subscribe Now

Water can be “the most destructive force that a community can experience," said Don Holland, who leads GHD's Canadian water market program.

Longer, hotter droughts and subsequent wildfires damage agriculture, buildings, infrastructure, and habitats. Underground aquifers are being drawn down. Large swaths of wetlands and forest areas are being cleared and drained, and rivers are being modified for hydropower, irrigation, and water supply, all constituting serious changes to the global water cycle, the study explains.

Of course, the human cost is mounting, too. In 2021, 100 million people were affected by such climate-induced emergencies. The financial cost is already at concerning levels. Droughts, floods, and storms in 2021 cost more than $224 billion globally, according to the Emergency Events Database of the Centre for Research on the Epidemiology of Disasters.

GHD assessed the water risks in seven countries with varied economic and climatic conditions, using global insurance data and scientific studies on the effects of extreme weather events.

In the U.S., the world's biggest economy, losses could total $3.7 trillion by 2050, with gross domestic product contracting by about 0.5% each year until then. China, the world's second-largest economy, faces cumulative losses of around $1.1 trillion by 2050.

Manufacturing and distribution would be hardest hit, followed by agriculture, retail, energy, and banking.