Damage to the environment from climate change, extreme weather and biodiversity loss is the main danger in the coming years, the World Economic Forum says, though the pandemic has highlighted the long-term risk of infectious diseases.
In its annual Global Risks Report, released Tuesday in Geneva, the WEF says environmental issues pose the biggest risk in terms of both impact and likelihood. But the group that runs the Davos forum attended by world leaders, economists, chief executives and billionaires warns that the damage done by the pandemic will make it harder for governments to fix environmental problems.
“Societal fractures, uncertainty and anxiety will make it more difficult to achieve the co-ordination needed to address the planet’s continued degradation,” the WEF says in the report.
The health of the environment lost priority during the pandemic, which started a year ago and has killed about two million people worldwide.
But even before the health crisis, the withdrawal of the United States – the second-biggest polluter and emitter of carbon dioxide, after China – from the 2015 Paris Agreement battered global efforts to curtail the output of greenhouse gases.
Emissions fell an estimated 7 per cent in 2020 due to lockdowns and a plunge in the demand for oil used in transportation – not because of a co-ordinated effort by governments and industries to reduce output. They are expected to rise again as COVID-19 vaccines trigger economic revivals and fill up passenger planes.
The administration of president-elect Joe Biden, who is to be sworn in Wednesday, has vowed to rejoin the Paris Agreement immediately as part of a new effort to restore American climate leadership. It is also set to revoke the permit for the Keystone XL pipeline, which would have taken 830,000 barrels a day of Alberta crude to U.S. pipelines and on to oil refineries on the Gulf Coast.
The WEF report cites the top five risks in terms of “likelihood” (in order) as extreme weather, climate action failure, human environmental damage, infectious diseases and biodiversity loss.
In terms of “impact,” the top risks were infectious diseases, climate action failure, weapons of mass destruction, biodiversity loss and natural resource crises.
Financial and economic risks, ranging from an “asset bubble burst” to “debt crises,” dominated the respondents’ worry list in the three-to-five-year horizon (environmental risks dominated the long-term horizon).
In a WEF panel discussion, Guillaume Barthe-Dejean, director of the chairman’s office at SK Group, a diversified South Korean industrial group, said a sovereign debt crisis is emerging as a clear and imminent danger as governments, especially those in the developing world, load up on debt to stimulate economies battered by pandemic-induced recessions. “We may be sleepwalking into the next debt crisis,” he said.
Earlier this month, the World Bank said the pandemic had led to the fastest increase in government debt in more than three decades. Already, several countries with weak economies, including Lebanon, Ecuador and Argentina, have defaulted on their debt.
“As the COVID-19 pandemic wreaks havoc on the global economy, poorer countries who will be hardest hit by the virus will also face a debt crisis,” the World Bank said in December.
The G20, whose host this year is Italy, is allowing the world’s poorest countries to suspend repayment of official bilateral credit in May.
The WEF report says the pandemic has shown that ignoring potential dangers, such as pandemics, only makes them harder to tackle once they happen. The group first warned about pandemics 15 years ago, in its debut World Risks Report.
In the panel discussion, Peter Giger, the chief risk officer at Zurich Insurance Group, said, “It’s always cheaper to build the dam than pay for the flood.”
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