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Central bankers are preparing for the catastrophic cost of climate change

Hurricane Harvey is pictured off the coast of Texas, U.S.
NASA/Handout via REUTERS
Hurricane Harvey is pictured off the coast of Texas, U.S. from aboard the International Space Station.
  • Gwynn Guilford
By Gwynn Guilford



Climate change is a unique economic problem with catastrophic consequences, the worst of which are still far away. It’s a “tragedy of the horizon,” as Mark Carney, Bank of England governor, memorably dubbed it.

Views about the urgency of the situation differ. However, scientific advances in “attribution,” along with increasingly rich data from insurers, make it clear that the economic toll is already coming due. Since the 1980s, the annual total of costly weather-related disasters has doubled, while estimated losses have jumped from an annual average of $30 billion in the 1980s to $110 billion over the last decade (both amounts in 2018 dollars), according to data from Munich Re, the reinsurance giant. (Although the trend is less pronounced when accounting for increasing economic development over the last 40 years, the frequency of ultra-costly years has risen.)

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