$ 20 trillion in losses ... natural disasters threaten the global economy

Trillions of dollars of market value are likely to fade due to climate change.

In his article published by the American "Oil Price", Nick Cunningham said that there are many reasons that have contributed to the damage of the global economy, and the material damage caused by natural disasters is increasing.

According to the insurance company "AO", 2017 and 2018 were among the years in which the world suffered a lot of economic losses due to natural disasters.

And the real estate market along the coasts will see massive material damage, as it will know a deep repricing process as the threat grows.

This is due to a variety of mechanisms that contribute to deepening the real estate market crisis, such as the movement of people from those areas, the restrictions that will be imposed by building division laws, as well as the withdrawal of insurance companies and the support it provides, and the withdrawal of investors to capital.

Climate change impacts
In a November report, the Center for American Progress reported that if sea level were to rise by six feet by 2100, American homes valued at about $ 900 billion would be submerged underwater. But countries will surely make determined efforts to tackle the climate change dilemma that could bring about many changes in the value of assets.

A new report on the principles of responsible investment concluded that the constraints imposed by climate policies will result in the loss of the fossil fuel group of companies approximately $ 2.3 trillion.

It is noteworthy that the principles of responsible investment are an international network of investors with assets of $ 86 trillion under their management.

Industrial companies note that as long as there is demand, they will continue to meet this demand, but as the impacts of climate change worsen, the likelihood of policy change will increase dramatically.

At present, the world is moving towards a 3 ° C rise in temperature at the end of the century, twice the rate that scientists and governments aim.

Last month, Fiona Reynolds, executive director of the Principles for Responsible Investment, wrote that it was highly unlikely that governments would be allowed to let the world slip to 2.7 ° C without being forced to take action as quickly as possible.

According to the network, the political parties' response is likely to be strong, surprising and disorganized.

The writer emphasized that the Responsible Investment Principles Network believes that the fossil fuel sector could lose a third of its current market value, as coal, oil and gas reserves are likely to become mere stuck assets.

According to historian Adam Toze, there are between one and four trillion dollars of energy assets that the world can lose, as well as twenty trillion in the industrial sector as a whole.

But what is most worrisome is how a long list of impacts could affect a variety of industries, which in turn affect the financial system as a whole.

The risk of flow of investments
In one of its reports, the Center for American Progress wrote that the pressure that could put on a large, complex, and interconnected financial institution, or the pressure that smaller firms that all face the same risks could affect the financial system.

The writer noted that there is speculation that the combined effect of the massive repricing of assets that will be experienced - along with increased physical damage associated with climate change - could result in a financial crisis.

The fate of many banks, insurance companies and other financial intermediaries is closely related to the oil and gas sector.

Given the low value of these assets, financial losses may double and trillions of dollars will evaporate into the air.

Currently, governments continue to undertake relatively minor reforms, although the degree of inaction in measures to reduce the impact of climate change varies with the government.

Investments continue to flow into sectors at risk of climate turmoil, and the oil industry has invested nearly $ 50 billion in projects that run counter to what the Paris Climate Agreement stipulates since 2018. Consequently, these projects will become unviable in a world where carbon emissions are severely restricted.