The Heat Is Online

Insurer: Warming WIll Bankrupt Global Economy

Climate Change Could Bankrupt Us by 2065

THE HAGUE, The Netherlands, November 24, 2000 (ENS) - The sixth largest insurance company has warned that damage to property due to global warming could bankrupt the world by 2065. Dr. Andrew Dlugolecki, director of general insurance development at CGNU, told delegates attending the international climate change summit in The Hague that the rate of damage caused by changing weather will exceed the world's wealth.

CGNU is a top five European life insurer and the United Kingdom's largest insurance group.

"Property damage is rising very rapidly, at something like 10 percent a year," he told a briefing at the 6th Conference of Parties (COP 6) to the UN Framework Convention on Climate Change, yesterday.

"We've still not yet really begun to see the effects of climate change in the West. What we are seeing so far is largely the result of more people living in areas which are becoming more dangerous.

"But once this thing begins to happen, it will accelerate extremely rapidly, as the IPCC report makes clear."

Dlugolecki contributed to a Intergovernmental Panel on Climate Change (IPCC) report due out next year. The IPCC consists of more than 2,500 scientists from around the world, and its first assessment report in 1990 was used as the basis for negotiating the United Nations Framework Convention on Climate Change (UNFCCC).

Dlugolecki said that the current rate of growth of damage of 10 percent a year will exceed Gross Domestic Product by 2065. He added that the insurance industry was in danger of "running out of money," to deal with the disasters.

"This stark warning must help focus the minds of everyone sitting round the negotiation table at the climate summit," said Mark Johnston of Friends of the Earth. "We've all seen the storm warnings, now we are being told the financial forecast. These talks must not fail to produce a deal that will prevent future climate chaos."

Dlugolecki proposes a more radical approach to climate change than is being discussed at COP 6. The concept, known as contraction and convergence, has long been promoted by the London based group the Global Commons Institute (GCI).

GCI describes itself as an independent group of people whose aim is the protection of the "Global Commons." It fears the world may be driven beyond the threshold of ecological stability by the relentless pursuit of economic growth.

The 10 year old group has proposed a contraction and convergence framework under which all countries are allocated tradable quotas of a global emissions budget. As the global budget contracts the distribution between countries gradually converges, reaching equal per-capita levels.

Put simply, carbon dioxide and other greenhouse gases caused by human activity must be cut drastically, but every country should have an equal right to use the fuels which emit carbon. Huge cuts in emissions from developed nations should allow a corresponding emissions rise from developing countries.

"If Contraction and Convergence is adopted as the tool for managing CO2 and other greenhouse gases, there will be a transition to a point (convergence) where future entitlements to emit will have become proportional to population," says GCI on its website

In projections, GCI suggests 2045 will be the year of convergance. It says population forecasts could become critical and be the subject of negotiation. "However, it could be counterproductive to create an incentive for countries to increase their share of the global emissions budget through population growth," says CGI.

"We suggest that a starting position should be that Annex One countries are treated as stable from 2000 forward, and that non-Annex One countries are treated as stable from the Convergence year (2045) forward.

Annex One countries are the 38 industrialized countries, plus the European Union, committed to making cuts in greenhouse gas emissions under the 1997 Kyoto Protocol.