Climate Hysteria and Credit Ratings
As another brick in the wall of climate hysteria, apparently Standard & Poor's Ratings Services is warning that "climate change will hurt nations' credit ratings." Not may, not might, not likely to -- but will:
"Poorer countries and nations with already low ratings will be hit the hardest by the effects of climate change ... [and] emerging markets in Africa and Asia are the most at risk ... [S&P] classifies climate change as a global mega-trend and estimates that countries around the world will suffer from the effects of warming weather, primarily in their economic growth and public finances. While S&P has not yet changed a national government's credit rating based on extreme weather events, which have been increasingly linked to climate change, it points out that weather-related losses have been on the rise on all continents. This could become a factor in future credit ratings, S&P noted."
As Roger Pielke and others have previously shown, there is no evidence that climate change is increasing the costs of weather-related disasters when the data is properly normalized to the size of the economy.
A recent report from the World Bank tabulates global weather-related disaster losses in constant 2012 US dollars between 1980 and 2012. When these losses are normalized to the size of the world economy, we see the following pattern.
Weather-related disaster losses make up a tiny portion of the global economy. They average just 0.2 percent of GDP regardless of whether we look at the periods from 1980, 1990, or 2000 to the present. Of course, there is no statistically significant trend in losses over these timeframes.
It is nonsense to claim that "weather-related losses have been on the rise." Those who do use non-normalized data, which is meaningless. Weather-related losses are simply not comprising a larger portion of the global economy over time.
As for general credit-risk issues, the collective gross debt of the emerging market and developing economies has dropped like a rock since 2000, from 48 percent of GDP to only 33 percent -- and the projections are for it to continue declining. These economies already make up more than half of the global economy, and the rate of global economic growth since 1980 has been accelerating, not slowing down, including and especially in the emerging markets of Asia and Africa. Gross debt in these two regions has also declined sharply over the past 15 years to less than 30 percent of GDP in emerging and developing Asia and 35 percent of GDP in sub-Saharan Africa. North Africa's gross debt has been reduced from 70 to 50 percent of GDP since 2000.
All regional emerging market and developing economies have much more favorable debt positions than they did a decade ago. If economies are growing faster and debt is declining rapidly, that suggests the credit-worthiness of these economies should be most likely to improve over time, not decline.
Just like the insurance industry, the ratings agencies cannot lose by hyping concerns over climate change. Both sectors have identified ways of potentially lowering their risks at little to no cost to themselves, all the while externalizing their possible risk reduction on the general public.
Follow along the reasoning for why industries like these perpetuate the alarmism. Lowering greenhouse gas emissions is highly unlikely to lead to more weather-related disasters, unless you have a new theory of GHG emission reduction induced destabilization of the global climate system. On the other hand, the alarmists tell us that increasing GHG emissions are highly likely to lead to more weather-related disasters. Thus, if we collectively reduce GHG emissions, the insurance industry and ratings agencies will not see their risk increase. If we don't collectively reduce GHG emissions, these industries have the alarmists telling them their risks will increase.
Consequently, regardless of the lack of evidence that their risks are increasing (the global economic and weather-related losses datasets suggest their concerns are not supported to date), these industries will continue to promote unwarranted caution, and by doing so, they seem likely to profit from climate alarmism. A classic vested business interest, and another reason to ignore them -- at least until they can find more compelling evidence to take their concerns seriously.