Over the past decade, climate-related extreme weather events have cost the global economy more than $2 trillion, with the United States experiencing the largest economic impact, according to a report released as global leaders gather for the COP29 summit in Azerbaijan.
The findings underscore the urgent need for increased resilience and financial support to manage the growing economic risks posed by extreme weather, according to John Denton, secretary-general of the International Chamber of Commerce (ICC), which commissioned the report.
The report, prepared by Oxera for the ICC, analyzed nearly 4,000 climate-related events between 2014 and 2023 that affected approximately 1.6 billion people. The total economic damages from these events rival those of the 2008 global financial crisis. In the most recent two years of the study, global economic losses from extreme weather surged to $451 billion—a 19% increase compared to the previous eight years.
The United States bore the heaviest financial burden, with damages totaling approximately $935 billion. China and India followed, with respective losses of $268 billion and $112 billion. On a per capita basis, however, smaller regions such as the French-administered Saint Martin faced the highest average losses, reaching $158,886 per person. US territory Puerto Rico, still recovering from the effects of Hurricane Maria in 2017, ranked fifth on the per capita list of worst-affected areas, highlighting the unique vulnerabilities of smaller, disaster-prone locations.
The report emphasizes that developing countries are particularly vulnerable to economic impacts from extreme weather, with single disasters sometimes surpassing an entire nation’s annual GDP. Ilan Noy, a disaster economist at Victoria University of Wellington, noted that high-income countries tend to report larger financial losses due to high asset values, but poorer regions bear longer-lasting impacts that are often underrepresented in these statistics. Losses of homes and livelihoods in poorer countries can have far-reaching effects that go beyond financial metrics, affecting social stability and community resilience.
As delegates meet for the UN Climate Change Conference (COP29), the ICC calls for more rapid deployment of financial resources to assist countries most vulnerable to climate impacts.
“The economic impact of climate change requires a response of similar speed and decisiveness [as the 2008 financial crisis],” said Denton.
He added that developed nations have a responsibility to support lower-income countries as they transition to climate-resilient infrastructure.
Denton also underscored that financial assistance for climate action in developing countries is not only an act of solidarity but an investment in global economic stability. He warned against treating this summit as a “transitional” COP, stressing the need for tangible outcomes that can accelerate climate action.
The upward trend in extreme weather events reflects growing climate volatility. Scientists have observed increasing links between human-driven climate change and more frequent or severe heat waves, wildfires, and hurricanes. According to research from Wood Mackenzie, the frequency and economic cost of extreme weather have steadily increased, driven partly by human factors such as rising fossil fuel emissions and infrastructure expansion in high-risk areas.
Recent climate research underscores the direct human cost of these trends. For instance, a recent European study linked more than half of 2022’s heat-related deaths to climate change, while another found that climate change had doubled the likelihood of the extreme rainfall seen in Europe this year. While certain weather impacts are clearly associated with climate breakdown, researchers also caution that attributing specific economic damages remains complex.
The ICC report urges leaders at COP29 to agree on mechanisms to expedite climate financing, especially for developing nations that face disproportionate climate risks. Denton emphasized that each dollar allocated to climate action can help to build a more resilient global economy.
With input from the Guardian and Axios.
