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A working paper from the U.S. Congressional Budget Office recently estimated the distribution of changes in gross domestic product in the year 2100 resulting from changes in temperature.

And it could be bad, really bad—or hopefully not so bad, if things go better than expected.

The CBO performed and combined those effects with global temperature distributions forecast for the year 2100.

The CBO projects that future temperature increases on average will cause the GDP to be 4% lower in 2100 than it would have been if temperatures remained unchanged after 2024.

Because “considerable uncertainty surrounds the long-run effects of temperature on output in the United States,” the CBO gives a 5% chance that GDP in 2100 will be at least 21% lower than it would have been in the absence of additional changes in temperature.

There is a similar chance that GDP will be at least 6% higher by 2100.

While the paper leaves a bit of wiggle room, the underlying message in the findings is that a warmer world probably won’t be good for the GDP.

“Climate change is expected to affect the United States in a variety of ways in the 21st century,” the paper states. “Although those effects will be positive in some ways or in certain areas of the country, the overall effect is expected to be negative: Temperatures will increase, the risk of damage from storms and wildfires will increase, and the productivity of outdoor workers will decline.”

Nat Cats And Insurers

As natural disasters become more frequent and severe, insurers are pulling coverage from areas vulnerable to extreme weather. But their “efforts to dodge the costs will be in vain,” writes .

“Governments won’t tolerate permanent insurance dead zones and can’t afford to pay up themselves,” the author writes.

That means property/casualty companies will “end up footing much of the bill one way or another,” she adds.

The author pointed to January’s California wildfires, which have so far cost insurance companies nearly $7 billion in losses from the biggest two of the Los Angeles-area wildfires that swept through the region and destroyed tens of thousands of homes, as well as the 2019 and 2020 bush fires in Australia and the massive flooding in Germany in 2021.

“Given the extent of such destruction, it stands to reason that insurers would be on the hook. And to an extent that is true,” she writes, adding that insured losses have accounted for about 40% of total economic costs from natural disasters in recent years, according to Breakingviews calculations using Aon data.

Climate And Property Insurance

The best way to keep price increases in check for property insurance in places that are particularly exposed to climate change is to mitigate the impact of natural disasters, AXA SA CEO Thomas Buberl said in an interview.

He said that prevention needs to become “a mandatory part” of insurance “to avoid climate risks not being insurable anymore,” and the idea behind that would be to shift “our own activities toward helping the customers to better protect their properties.”

Buberl’s interviewed was covered in a Bloomberg article on Ãå±±ÂÖ¼é. He too cited the recent L.A. wildfires, emphasizing reconstruction must focus on non-flammable building materials with an eye of mitigating losses from future blazes.

“How will these buildings be rebuilt?” he told Bloomberg. “Concrete buildings didn’t burn, only wood buildings did.”

The mitigation measures being proposed by Buberl include development should include “public-private partnerships,” he said.

An existing insurance scheme in France seeks to spread the losses caused by natural disasters across a wider group of payers could serve as a model, Buberl said, labeling it a “piggy-bank mechanism,” Bloomberg reported.

Heat and Aging

Prolonged exposure to extreme heat is probably bad for one’s health, but it could also could make someone biologically older.

A finds that older adults living in hotter regions of the U.S. showed signs of accelerated aging at cellular levels.

University of Southern California scientists analyzed blood samples from 3,700 people who are age 56 and up, measuring their biological age by examining DNA changes. They calculated the number of heat days in neighborhoods using a heat index, covering time windows from the day of blood collection to six years prior.

The findings are intended to provide insights into the biological underpinnings linking heat to aging-related morbidity and mortality risks.

Health impacts from heat are already known to be adverse among older. This study goes a step further.

“Although links between extreme heat and morbidity and mortality are well established, knowledge of the biological underpinnings is limited,” the study states.

According to the study, severe heat stress can induce a “maladaptive epigenetic memory,” which can be coded through changes in DNA methylation patterns.

“DNAm, arguably the most well-studied epigenetic marker, is known to be responsive to environmental stressors, modulating gene expression and exerting downstream effects on morbidity and mortality risks,” the study states.

Past columns:

• Climate Risks Again Top List of Risk Manager Worries
• Actuary Group Forecasts Climate Change to Have Massive GDP Hit Without Policy Action
• Senate Committee Reveals Climate Change Danger to Financial System
• UCLA and NOAA: Climate Change Baked Western US Despite the Rainfall
• Report: Climate Risks Increasing Insurance Rates and Hurting CRE Returns

Topics USA Climate Change