First-of-its-kind ‘Aquanomics’ research shows droughts, floods and storms could cause GDP loss of CA$7.2 trillion (US$5.6 trillion) across seven studied countries by 2050
Toronto, ON (Aug. 29, 2022) – New research, launched by global professional services company GHD, titled Aquanomics: The economics of water risk and future resilience, reveals that droughts, floods, and storms could result in a total loss of CA$139 billion to Canadian gross domestic product (GDP) between 2022 and 2050. This equates to an average annual GDP loss of 0.2%.
This study represents the first time the economic impact of water risk has been calculated at a GDP and sector level. The research combines insurance data with econometric modelling to demonstrate the wider economic impact of increased future water risk. It focuses on seven key countries across GHD’s footprint – Australia, Canada, China, the Philippines, the UAE, the UK and the U.S. (Country data provided below)
Canada’s large land mass, combined with low population density, contributes to water risk having less of an impact than many of the other countries in the study, but there are still risks. Flooding alone is expected to cost the Canadian economy over CA$40bn in the years leading up to 2050, making up almost half of the country’s estimated total direct losses.
Estimated total direct losses:
- Attributed to flood: CA$40 B
- Attributed to storms: CA$34 B
- Attributed to drought: CA$14 B
- Total direct losses from 2022 to 2050: CA$88 B
Estimated total sector loss from 2022 to 2050:
- FMCG & Retail: CA$26 B (0.3% average output loss per year)
- Manufacturing & Distributions: CA$64 B (0.2% average output loss per year)
- Banking & Insurance: CA$21 B (0.2% average output loss per year)
- Agriculture: CA$4 B (0.1% average output loss per year)
- Energy & Utilities: CA$14B (0.1% average output loss per year)
Don Holland, Canada water market leader at GHD, says: “The Aquanomics report not only reveals the threat that increasingly frequent and severe water-related events pose to global economies, but also to communities and natural ecosystems that rely on a balanced water cycle for survival.
Canada may not be a water-stressed country, but it is a country of extremes, and these extremes are getting more pronounced. With the Canadian government estimating that the country is warming at double the rate of the rest of the world, a growing number of municipalities have declared climate emergencies and are implementing policies to boost resiliency. It is up to the water industry to help clients implement a risk-based management approach to provide the resiliency communities require to grow and thrive during these uncertain times. In addition to providing the required resiliency, this also provides us with an opportunity to improve our communities and environment.”
Estimated GDP loss by country between 2022 and 2050 (USD):
- US: $3.719T (0.5% average annual GDP loss)
- China: $1.144T (0.2% average annual GDP loss)
- Australia: $312B (0.6% average annual GDP loss)
- UK: $153B (0.1% average annual GDP loss)
- Philippines: $124B (0.7% average annual GDP loss)
- Canada: $108B [CAD$139 B] (0.2% average annual GDP loss)
- UAE: $27B (0.1% average annual GDP loss)
About the Report
Aquanomics: The economics of water risk and future resilience utilized a three-phased methodology to estimate the direct losses, sector losses and GDP losses that will be attributed to water risk (droughts, floods and storms) between 2022 and 2050. The study focuses on seven key countries across GHD’s footprint – Australia, Canada, China, the Philippines, the UAE, the UK and the US – and three US regions – Northeastern US, Southeastern US and Southwestern US. For further details, please refer to the full report https://aquanomics.ghd.com/ and methodology.
The modelling was constructed by Cambridge Econometrics – an independent organization of economists that specialize in data and provide credible and robust evidence across a broad spectrum of complex 21st century challenges facing our economies, societies and the natural environment.
A global professional services company that leads through engineering and architectural skills and experience, GHD is committed to solving the world’s biggest challenges in the areas of water, energy, and urbanization. Our forward-looking, innovative approaches deliver extraordinary social and economic outcomes for communities around the world.
Effective water use is part of all business, industry, and community life. GHD has a powerful global network of water competencies and experience that we can apply to local scenarios. We offer a broad range of services covering feasibility studies, planning, design, project management, construction and asset management services as well as operational optimization.
To find out more about GHD please visit www.ghd.com.
About GHD in the Americas
GHD has long standing client relationships, a significant project and geographic footprint in the Americas and employs 40 percent of GHD’s global workforce with nearly 4,000 professionals in over 100 offices in the US, Canada and Chile. GHD ranks #9 in international design firms operating in the US and #8 in Canada according to Engineering News-Record’s 2020 annual survey of key market segments. These rankings reflect the size and significance of our growing Americas business.
SOURCE: GHDTags: climate change, flood, flood resilience, Natural Catastrophes, outlook / predictions, severe weather