26 September 2017
Tens of billions of pounds to be lost by UK economy due to extreme weather – WWF report warns
Extreme weather and other possible scenarios that lead to environmental decline could have a significant impact on UK jobs and the economy if left unchecked, and must be factored into governmental and business decisions, according to a new WWF report that uses new risk mapping techniques to look at the cost of inaction by 2050
Without action to protect UK water supplies, a future drought could reduce UK GDP by around £35bn (1%) and 354,000 jobs[i] may be lost, according to new research by AECOM Infrastructure & Environment and Cambridge Econometrics, on behalf of WWF.
The new report, ‘Developing and piloting a UK Natural Capital Stress Test’[ii], shows the potential impact on the UK economy in the year 2050, if actions are not undertaken to curb or adapt to environmental changes, and water supplies are not managed sustainably.
It also found that, if the UK followed a business-as-usual scenario – paying little or no heed to population growth, climate change and continued housing development on flood plains – a repeat of the 2012/13 winter floods in 2050 would affect many more properties:
- 2.5m homes – more than double (+129%) the number affected in 2012/13;
- 770,000 non-residential properties (mostly businesses) – 45% more than in 2012/13;
- 783 care homes - 78% more than in 2012/13; and
- 1,652 schools - 48% more than in 2012/13[iii].
This could lead to a 70% increase in damages to £2.2 billion - up from an estimated £1.3 billion cost of the 2013/14 flood.[iv]
The report shows the economic impact of environmental decline by assessing the costs of events that impact on land, rivers and nature. The economic estimates were based on an adverse but plausible scenario of environmental decline that assumes an international failure to reduce greenhouse gas emissions sufficiently, keeping temperatures on course for 4°C of global warming. The scenario also assumes a reduction in public subsidies for UK agriculture, growth in demand for water and a significant increase in the frequency and severity of pest and disease outbreaks in the UK.[v]
The overall aim of the study was to develop and pilot an approach that would allow the UK Government and business to identify the potential impacts of environmental changes on the economy in order to help prioritise and inform efforts to mitigate the most significant risks. At the moment, far too little is being done to prepare for these risks, despite warnings from WWF and others.
Karen Ellis, Chief Advisor on economics and development at WWF said:
“We have some major environmental challenges coming our way, and our economy needs to be future-proofed. From increased risks of flooding to soil erosion, drought and air pollution, our environment is changing quicker than people think. This is bad for business, bad for our national economy, and bad for jobs. But businesses and governments across the UK are giving it too little consideration when making decisions.
“A stress testing approach, and a long-term plan for managing our natural capital, would enable the UK Government to better understand and manage these risks. Environmental damage is already imposing significant costs on the UK economy and businesses. The UK Government must start addressing these issues properly or it is going to cost us all money and some of us might even lose our jobs.”
The report also found that increased extreme weather events such as floods, wildfires, poor weather and heatwaves and disease could have a major impact on food production, resulting in potential costs of over £33 billion (a 0.9% reduction in GDP) and affect 347,000 jobs.
Already some companies are factoring environmental considerations into their business thinking. For example Coca-Cola has shown a long term global commitment to protecting and replenishing the water resources it relies on so heavily. In the UK Coca-Cola and WWF have been working with farmers in East Anglia – an area where much of the sugar beet used in Coca-Cola’s drinks is grown - since 2012 to improve the way they manage their land. Improved practices reduce the run-off pollution from agricultural production, which in turn improves river and water health.
Liz Lowe, Sustainability Manager at Coca-Cola Great Britain, said:
“Water is the main ingredient in all of our drinks, and it’s also an important part of our production process. That’s why we want to make sure we use it responsibly and sustainably with a commitment to replenish an equivalent amount of the water we use back to nature and communities. With only one fifth of rivers in the UK currently healthy, we want to make a difference to help guarantee the future of our UK business and our work with WWF supports that mission.”
The stress testing approach was developed through adapting a widely used technique that considers the interdependencies between different sectors of the economy – to quantify for the first time how environmental changes would affect GDP, growth, jobs and other economic indicators in the future. The work was undertaken by a highly respected team from AECOM and Cambridge Econometrics, with input from government, businesses and other experts. It was also peer reviewed by a team of academic advisers[vi].
In a joint statement, Dr. Steve Smith, Technical Director at AECOM, and Richard Lewney, Chairman of Cambridge Econometrics said:
“Our standard measures of prosperity take no account of the hidden costs of our impact on the natural environment. This report estimates the economic costs to the UK by 2050 of a failure to protect the natural capital on which all life depends. We hope these things do not happen, that we take a different path, but the fact is that it is clear how much worse things could get, unless we take action now to safeguard our natural environment.”
[i] This is based on a three-month UK wide drought in 2050, and assumes continued depletion of water reserves from now until 2050.
[ii] Natural capital is the world's stocks of natural assets which include geology, soil, air, water and all living things. It is from this natural capital that humans derive a wide range of services, including so called ‘ecosystem services’, which make human life possible.
[iii] The results set out in the following table represent a combination of the change in the likelihood of acute flood events due to changes in the climate system, and a change in the magnitude of the associated impacts due to population growth, a reduction in the level of planned adaptation, and changes in the climate system.
No. residential properties at high risk of flooding[iv]
No. non-residential properties at high risk
No. clean and wastewater sites at high risk
No. rail stations at high risk
Length of road at high risk (km)
Length of railway at high risk (km)
No. power stations at high risk
No. substations at high risk
No. mobile phone masts at high risk
No. care homes at high risk
No. schools at high risk
No. emergency services at high risk
No. hospitals at high risk
No. GP surgeries at high risk
No. landfill sites at high risk
[v] The scenario was developed around the five key drivers of ecosystem change identified in the UK National Ecosystem Assessment.
- Climate change - The international community fails to meet the required reductions in greenhouse gas emissions to limit warming to two degrees and instead follows a four degrees of warming path. The subsequent impacts cause significant reductions in the amount of water in the environment that can be sustainably withdrawn, while also increasing the demand for water during the driest months. The frequency and magnitude of floods in the UK also rise significantly and cause growing costs to a range of economic sectors. Globally, changes in the climate system disrupt food production in the rest of the world. International food prices increase as a response to the supply shock, with an assumed doubling of prices, similar to the price hikes of 2007-08.
- Invasive species - Increasing demand for global imports and a more diverse supply chain, together with changes in the climate and land use, lead to a significant increase in the frequency and severity of pest and disease outbreaks in the UK and growing costs for the agriculture industry.
- Habitat change - A reduction in public subsidies for UK agriculture results in abandonment of land with low agricultural productivity. Growing demand for housing results in urban expansion into Green Belt and peri-urban farmland areas and onto riverine and coastal floodplains.
- Nutrient enrichment and pollution – Relaxation of environmental regulations results in increases in livestock stocking densities and more widespread and intense use of pesticides and fertilisers causing long-term decreases in the quality of soils and water and further decline in pollinator populations. This in turn results in increased costs for agriculture, water treatment and reduced capacity of ecosystems to regulate flooding.
- Overexploitation of resources – Growth in demand for water exacerbates pressures on increasingly scarce water resources in some parts of the country. Water shortages become commonplace.
The report pilot tests the proposed approach focusing on the provision of three specific ecosystem services by 2050: crops and livestock, water supply, and flood regulation. The work was informed by input from a number of experts and key stakeholders in government and business, and a peer review process from relevant technical experts.
[vi] Academic advisers on the project were:
1)Paul Ekins is Professor of Resources and Environmental Policy and Director of the UCL Institute for Sustainable Resources at University College London. He is a member of UNEP's International Resource Panel and a Senior Consultant to Cambridge Econometrics.
2)Annela Anger-Kraavi is Director of Studies and College Lecturer in Economics at Downing College in Cambridge and Chief Executive of the Cambridge Trust of New Thinking in Economics. She was an author of the UK National Ecosystem Assessment (Follow On) Work Package 2.
3)Peter Costigan has extensive experience of environmental research and policy. He was a Deputy Director with Defra for 7 years, and played a lead role in commissioning and managing the UK Natural Ecosystem Assessment and the UKNEA-FO Project.