Climate catastrophes on ports are expected to cause multi-billion-dollar risk to economic activity

New research from Oxford’s Environmental Change Institute expects over $122 billion impact of economic activity, with a staggering $81 billion in international trade. 

According to the paper in Nature Climate Change, systemic impacts – those risks faced due to knock-on effects within global shipping, trade, and supply chains network - will hit ports and economies around the world, even if the local ports are not directly affected by extreme events. The study estimates $81 billion per year maritime trade is at-risk, around 60% of which is because of cross-border knock-on effects; those outside a country’s own jurisdiction.   

It is believed that parts of northern Europe, the western United States, Southern Australia, the Middle East, and West Africa are particularly expected to feel such effects, mainly because of dependencies on East Asian ports. This is important because the risks faced as a result of foreign dependencies on ports are often overlooked. This became dramatically visible when Ukraine grain ports suddenly closed due to the Russian invasion. 

When the spill-over disruptions to dependent ports, trade flows, global supply-chains are considered, this adds up to a total potential at-risk cost of at least $122 billion of economic activity – say the researchers. 

Dr Jasper Verschuur, lead author of the paper, explains, "This clearly highlights the importance of quantifying these so-called systemic risks, as only looking at localised damage to infrastructure can hide the wider economic losses that could materialise during extreme events."

The research highlights the importance to call on countries to consider regulation to mitigate potential impacts of climate extremes, the research team suggests identifying alternative trading routes or partners and improving the resilience of port systems to such shocks. 

Dr Verschuur continues, "Adapting ports to climate change, which will be urgently needed in the future, can be considered a global public good, which should be help unlock much needed climate finance is this overlooked sector. Our research can help make the business case for doing so."

Find out more here.