Why is it important to draw a connection between the impact of COVID-19 and climate risks?

By Violaine Lepousez, manager - Climate Risk Resilience and Adaptation Division

The COVID-19 crisis is causing major disruptions to our supply chains, resulting in significant economic and societal impacts on our economies. 94% of the largest U.S. companies are reportedly experiencing supply chain disruptions (Fortune, February 21, 2020). From the automotive industry to the pharmaceutical sector, the impacts are being felt on both supply and demand. A recent report analyzes the factors exacerbating these impacts: a market sensitive to purchasing power, expertise concentrated in limited geographic areas, manufacturing plants or raw materials concentrated in specific regions, etc. (Kyu, March 17, 2020). Supply chains appear to have underestimated the risk of an epidemic (Classe-export, March 23, 2020); in other words, this risk was not assessed or incorporated into their business continuity plans.

 Kansai International Airport flooded after Typhoon Jebi struck in 2018[/caption]

These systemic shocks to our economies can also be climate-related.

It is therefore necessary to assess climate scenarios and plan for them. Here’s why. The vulnerability of these same supply chains to climate change has already been demonstrated: the floods in Thailand in 2011, the floods in Japan in 2018, the drought along the Rhine in Germany in 2019… These events have highlighted that a climate-related hazard in a given location can cause economic losses around the world.

 Rhine Drought, 2019[/caption] However, global warming will increase the likelihood of more intense and frequent climate-related hazards (heat waves, droughts, floods, storms, etc.) across the globe. It is therefore entirely possible that distinct climate events could occur simultaneously in different countries. The duration of these climate events could also be prolonged: droughts can paralyze shipping lanes or electricity production for months. The spatial and temporal combination of climate-related hazards can create a systemic risk to our economies. The analysis of risks associated with the impacts of climate change must therefore take into account the multi-hazard nature of climate change: in other words, it is necessary to develop scenarios for systemic climate shocks.  [caption id="attachment_13044" align="aligncenter" width="900"]

 Map of Extreme Weather Events in 2019 - Carbone 4 Publication

Contact the Resilience & Adaptation to Physical Risks Division