Japan’s biggest enemy has left a $90 billion bill in the nation’s pocket: climate change

Few things are more accurate in understanding a problem that affects everyone than appeal to the stomach. In March of last year, Japan woke up to news that made more than one person raise their eyebrows. Wasabi was experiencing a “bittersweet” moment (curry rice tooin fact). The reasons stemmed, first of all, from international demand due to the success of the nation’s cuisine. However, there is not enough wasabi on the planet to satisfy everyone, and part of the blame lay with a usual suspect that threatens many of the planet’s crops: climate change. The last bill of the nation is an announcement to sailors.

The economic catastrophe of climate change. Japan, a country with a long history of natural disasters, faces an unprecedented increase in the costs derived from climate change. Despite its recognized expertise in risk management and disaster resilience, the country continues to suffer some of the highest economic losses on the planet.

To give us an idea, according to a report from the International Chamber of Commercebetween 2014 and 2023, Japan accumulated Climate-related losses totaling a whopping $90.8 billiona figure only surpassed by the United States, China and India, nations considerably larger in population and territory.

Not only that. The projected future costs are even more alarming. An analysis conducted last December estimates that if current global climate policies continue, Japan will face damages worth a total of 952 trillion yen (about $6 trillion) until 2050a figure that far exceeds the nominal value of its current economy, estimated at 591.9 billion yenaccording to the Cabinet Office.

The problem of not being able to stop it. As we said, Japan’s disaster history is extensive, with devastating events like the Noto earthquake in 2023, Typhoon Hagibis in 2019 either the earthquake and tsunami that occurred in March 2011. In this regard, recent warnings about a possible megaquake in the Nankai Trench have further highlighted the constant threat facing the country.

In fact, the nation ranks sixth in the Disaster Risk Index of the telecommunications company Intersec, which evaluated the economic and human losses of almost 160 countries between 2000 and 2024. The country registered total economic losses of 2.35 billion dollars and 543 fatalities and/or injuriesadjusted to its population of 124 million.

The “urban” layout, another problem. Furthermore, the pattern that we see in all natural disasters such as those that occurred in l is repeated.The Los Angeles fireseither DANA in Valencia: Inhabited areas in disaster-prone areas. In the case of Japan, the combination of its extensive coastline, the high concentration of assets in densely populated urban areas and the scarcity of natural resources make it a highly vulnerable enclave to large-scale disasters.

Despite these risks, Japan has managed to mitigate the loss of life by advanced risk management strategiesas early warning systemsresilient infrastructure and emergency response plans. However, the economic costs continue to increase exponentially.

The price of inaction: it is urgent to take action. They told in Japan Times A week ago, the impact of climate change is also increasing the frequency and intensity of extreme weather events in the country, such as floods, typhoons and forest fires.

In this regard, a study by the International Chamber of Commerce analyzed almost 4,000 extreme events that occurred between 2014 and 2023, concluding that Global economic losses amounted to 2 trillion dollars. Japan was among the most affected countries, with economic costs higher than those of Germany (although below those of India).

The impact in Japan. Economic losses resulting from natural disasters amounted to 320 billion dollars worldwide last yearof which only 140 billion were insuredaccording to the report from the insurer Munich Re. This figure represents the fifth largest loss since 1980 and is significantly higher than the averages of recent decades.

In Japanese terms, it is expected that Climate change will reduce the nation’s Gross Domestic Product (GDP) by almost 10% annually if more ambitious policies are not adopted to mitigate its effects. In fact, an economic model from the Asian Investors Group on Climate Change estimates that Total economic losses until 2050 will reach 970 trillion yenwhich is equivalent to the loss of hundreds of thousands of yen per Japanese household annually. By then, projections indicate that Japan will be more affected than the United States and Europe.

Initiatives and adaptation. It is possibly the big question facing Japan and the entire planet, what can we do to mitigate disasters or adapt? In that sense and despite the gloomy perspectives of the studies, the Times emphasized that Japan has the potential to lead the reduction of greenhouse gas emissions through development of innovative technologiessuch as advanced batteries and offshore wind energy.

According to a recent report, if the country adopts a net-zero emissions scenario by 2050, the economy could benefit from a boost of 13.6 trillion yen annuallyplus savings of 40 trillion yen per year compared to current climate policies. In addition, Japan has also taken a leading role in funding international initiatives to help vulnerable countries. For example, has contributed $10 million to the United Nations Loss and Damage Fundaimed at mitigating the impact of climate change in developing nations.

Insurance and the Japanese pocket. It is the last leg of that global enemy, one that directly affects the nation’s pocketbook. Japanese households are already experiencing the impact of climate change through increased insurance premiums. In October 2024, the country’s four main insurers increased fire insurance rates by an average of 10%marking the fourth increase since 2019.

Furthermore, Japan’s General Insurance Tariff Organization has explicitly linked these increases to the increasing risk of disasters induced by climate change. Additionally, and according to climate campaign group Insure Our Future, climate change-related disasters accounted for more than $600 billion in insured losses between 2002 and 2022.

Data and more data, figures and more figures, which only highlight the urgency of more effective climate action to avoid or mitigate greater economic and social impacts of a common enemy.

Image | 岩手県宮古市, Douglas Sprott, Climate and Ec

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