The economic costs of failing to protect the environment

A report published by WWF this week that draws on our research finds that inadequate long-term management of UK water supply and demand between now and 2050 could leave the UK vulnerable to a drought which costs the economy £35bn (1%) in lost GDP and a loss of 354,000 jobs.

It also puts the economic cost of another significant flood event in 2050 (such as that of 2013/14) at £2.2bn if population growth and climate change go unchecked and not enough is done to adapt to changing weather conditions.

Helping government and business assess risk

Based on ground-breaking analysis by Cambridge Econometrics and AECOM Infrastructure & Environment ‘Developing and Piloting a UK Natural Capital Stress Test’ highlights the impact of events such as heatwaves, drought and floods on the UK economy.

The authors used economic modelling to demonstrate a link between the natural environment and the UK’s macroeconomy (GDP, inflation and jobs).

The study aims to help government and business assess the level of risk to the economy of environmental changes and identify areas where action could be taken to mitigate it.

Richard Lewney, Chairman of CE, says: “The UK’s standard measures of prosperity take no account of the hidden costs of our impact on the natural environment. This report estimates the economic costs of a failure to protect the natural capital on which all life depends.”

To the read the Independent’s article on the study, please click here.

CE is taking an increasing interest in how analytical techniques can inform policymaking under uncertainty. To find out more please contact