Losses from flooding could devalue homes by $80bn in Florida alone - McKinsey

In the absence of large-scale human action to remove CO2 from the atmosphere, nearly all of the global warming that occurs will be permanent on societally relevant timescales, according to a new report from McKinsey Global Institute.

The report, titled Climate Risk and Response, states that beyond 2030, further warming and risk increase can only be stopped by achieving zero net greenhouse gas emissions.
With increases in global average temperatures, climate models indicate a rise in climate hazards globally.

According to climate science, further warming will continue to increase the frequency and/or severity of acute climate hazards across the world, such as lethal heat waves, extreme precipitation, and hurricanes, and will further intensify chronic hazards such as drought, heat stress, and rising sea levels.

While the direct impact from climate change is local, it can have knock-on effects across regions and sectors, through interconnected socioeconomic and financial systems, says the report.

“Financial markets could bring forward risk recognition in affected regions, with consequences for capital allocation and insurance,” the report states. “Greater understanding of climate risk could make long-duration borrowing unavailable, impact insurance cost and availability, and reduce terminal values. This could trigger capital reallocation and asset repricing. In Florida, for example, estimates based on past trends suggest that losses from flooding could devalue exposed homes by $30 billion to $80 billion, or about 15 to 35 percent, by 2050, all else being equal.”