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  • by Trevor Loveday

Drought, floods and storms could wipe $153bn from UK economy

Droughts, floods, and storms could strip $153 billion form UK gross domestic product (GDP) by 2050, – an average annual GDP loss of 0.1%, according to research findings by professional services company GHD.

The GHD study, Aquanomics: The economics of water risk and future resilience, looks at the future economic impact of water risk in a range of climates including the UK, Australia, Canada, China, the Philippines, the UAE, and the US. It calculated that water risk could cost these key economies some $5.6 trillion by 2050.

The research found that the UK’s “temperate climate, high-resilience and widespread insurance protection”, meant its economic impact of water risk was the lowest of the nations studied.

According to GDP the study is the first to calculate the impact of water risk on GDP across the UK economy as a whole and at a sector level. The research combines insurance data with econometric modelling to demonstrate the wider economic impact of increased future water risk.

Aquanomics looked at the future impact on five critical economic sectors (see table) and predicted that in the UK, the manufacturing and distribution sector will be the most heavily affected by increasing water risk – facing total output losses of $89bn by 2050 due largely to restricted production processes, damaged assets, and disrupted distribution.

Despite the industry being heavily water dependent, the agriculture sector in the UK is estimated to be the least affected of those studies, with an annual output gain of +0.5%.

Aquanomics estimated that the US will be hit hardest, with projected losses of $3.7 trillion.

Estimated GDP loss by country between 2022 and 2050

Country Total GDP loss ($bn) Average annual GDP loss

Philippines 124 0.7%

Australia 312 0.6%

US 3719 0.5%

Canada 108 0.2%

China 1144 0.2%

UAE 27 0.1%

UK 153 0.1%

Estimated total loss by UK sector between 2022 and 2050

Sector Total output losses ($bn) Average annual output losses

Manufacturing & Distribution 89 0.5%

Energy & Utilities 19 0.5%

Banking & Insurance 17 0.1%

FMCG & Retail 14 0.1%

Agriculture +6bn +0.5%


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