As climate change becomes increasingly severe, there is growing pressure on businesses and governments to effectively measure its financial repercussions. Experts argue that the development of a standardized model to quantify the financial effects of climate events—such as storms, floods, and droughts—is urgently needed.
In an interview, Paresh Narayan, the President of the Academic and Asia-Pacific Applied Economics Association (APAEA), emphasized the importance of a standardized measurement model. Such a model would enable businesses to better assess both direct and indirect costs, secure insurance, and access climate financing. Narayan highlighted that measuring the destruction caused by climate change presents unique challenges distinct from assessing physical infrastructure damage.
He noted that the complexity of climate impact assessment varies widely depending on the affected sectors. For industries like tourism and manufacturing, direct losses and operational disruptions can be particularly significant. Narayan expressed concerns that without a reliable methodology, businesses would struggle to claim insurance or apply for climate resilience funds.
The verification process, essential for credible reporting, must ensure that accountants and auditors confirm that the reported damages are accurate. He underscored the significant role accountants play in this process.
The APAEA is working towards establishing a functional model through regional discussions, including a forthcoming roundtable with the Asian Development Bank (ADB). This initiative aims to develop tools that help businesses and governments manage and mitigate the financial risks posed by climate change effectively.
The goal of these efforts is clear: accurate assessments are vital for the recovery from climate events, ensuring that both businesses and nations can navigate this challenge effectively.
This emphasis on establishing a reliable measurement framework offers hope for businesses and governments alike. With a unified approach, there can be improved resilience against climate events, ultimately leading to stronger economic recovery and stability in the face of climate challenges.
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