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Ripple resonance amplifies economic welfare loss from weather extremes

Authors
/persons/resource/Kilian.Kuhla

Kuhla,  Kilian
Potsdam Institute for Climate Impact Research;

/persons/resource/sven.willner

Willner,  Sven
Potsdam Institute for Climate Impact Research;

/persons/resource/christian.otto

Otto,  Christian
Potsdam Institute for Climate Impact Research;

/persons/resource/geiger

Geiger,  Tobias
Potsdam Institute for Climate Impact Research;

/persons/resource/Levermann

Levermann,  Anders
Potsdam Institute for Climate Impact Research;

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Citation

Kuhla, K., Willner, S., Otto, C., Geiger, T., Levermann, A. (2021): Ripple resonance amplifies economic welfare loss from weather extremes. - Environmental Research Letters, 16, 11, 114010.
https://doi.org/doi.org/10.1088/1748-9326/ac2932


Cite as: https://publications.pik-potsdam.de/pubman/item/item_26040
Abstract
The most complex but potentially most severe impacts of climate change are caused by extreme weather events. In a globally connected economy, damages can cause remote perturbations and cascading consequences—a ripple effect along supply chains. Here we show an economic ripple resonance that amplifies losses when consecutive or overlapping weather extremes and their repercussions interact. This amounts to an average amplification of 21% for climate-induced heat stress, river floods, and tropical cyclones. Modeling the temporal evolution of 1.8 million trade relations between $\gt$7000 regional economic sectors, we find that the regional responses to future extremes are strongly heterogeneous also in their resonance behavior. The induced effect on welfare varies between gains due to increased demand in some regions and losses due to demand or supply shortages in others. Within the current global supply network, the ripple resonance effect of extreme weather is strongest in high-income economies—an important effect to consider when evaluating past and future economic climate impacts.