Environmental damage could lead to a new economic crisis, report claims

  • A report published on Tuesday warned that manmade environmental damage could trigger an economic collapse.
  • Rising temperatures – a result of climate change – would create risks to socioeconomic stability such as war, famine and large-scale migration, it said.
  • The report’s authors called on policymakers to change their outlook on climate change.
Lukas Schulze | Getty Images

The world is entering an age of unprecedented environmental breakdown that could see an economic collapse like the 2008 financial crisis, a thinktank warned on Tuesday.

According to a report from the Institute for Public Policy Research (IPPR), climate change is just one of many environmental threats which, when combined, threatens social stability. It said that natural systems were now being destabilized so quickly by human activity that dangerous tipping points would soon be reached.

Rising global temperatures would have consequences which threatened major economic, social and political disruption, according to the report – including increasing weather extremes, large-scale migration, conflict, and famine.

Economic fallout

The IPPR said the world must act urgently to prevent some of the worst possibilities being realized.

Among those possibilities was a potential fiscal catastrophe, with the report warning that human impact on the environment was now so great it risked generating significant economic instability.

"In the extreme, environmental breakdown could trigger catastrophic breakdown of human systems, driving a rapid process of 'runaway collapse' in which economic, social and political shocks cascade through the globally linked system – in much the same way as occurred in the wake of the global financial crisis of 2007/08," the IPPR said.

The report also warned that investors in fossil fuels may be exposed to a rapid decline in the value of carbon assets, which must occur if carbon budgets – annual limits on nations' carbon emissions – were to be met.

It also highlighted that poorer countries were more vulnerable to the consequences of environmental breakdown but were less able to prepare for or respond to them.

New mindsets needed

"Policymakers and politicians are not adequately recognising, let alone responding to the catastrophic threat posed by environmental change," the report's authors said.

Three shifts in understanding were needed to reverse this, they added, urging those in power to reassess their knowledge of the scale and pace of environmental breakdown, the implications this would have on societies, and the need for transformative change.

The report also warned that vested interests and a rapidly changing economy were also standing in the way of progress.

"Elite interests in countries across the world, including industries whose business model depends on continued environmental degradation, use their considerable power and wealth to influence political debates and policy decisions on environmental breakdown, with many instances of groups blocking or reversing progress," the report said.

"It is estimated that 100 companies are responsible for the emission of 71 percent of industrial greenhouse gases since 1988."