If Chinese premier Hu Jintao had any doubts about taking an aggressive stance to enforce carbon-emission reductions at the upcoming Copenhagen Climate Summit, a report today may push him over the edge. A detailed analysis of the potential economic impacts of rapid global warming, put together by insurance-industry experts and underwritten by the World Wildlife Fund and insurance giant Allianz, found that China stands to suffer a whopping $9 trillion in economic damage by 2050.

The U.S. followed closely behind, with $7 trillion in potential damage, and India took the third spot with $3 trillion in potential environmental damage. The study was notable in that it was performed by experts in insurance and actuarial research, rather than climate researchers, which implies more objectivity and financial-industry rigor.
The research also identified potentially catastrophic feedback loops resulting from global warming. The rapid thawing of the permafrost in the tundra around the northern parts of Siberia, Canada, and Alaska could not only cause enormous damage to existing infrastructure built to accommodate those conditions, but also could release massive amounts of carbon that's trapped in the permafrost.

Glacial melting combined with drier weather conditions due to global warming could also decimate river flows. Such glacial flows from the Himalayas feed key rivers in China and India. "In India alone, melt-water from Himalayan glaciers and snowfields currently supplies up to 85% of the dry season flow, and initial modelling suggests that this could be reduced to about 30% of its current contribution over the next 50 years," the report says.

A Worst-Case Scenario

The report paints a "worst-case" scenario, as is the wont of actuaries and insurers in pricing policies. In this scenario, sea-level rises will flood megaports in China, and New York, Boston, and Baltimore will all suffer massive damage. Wave surges from storms coming off the risen seas will cause further problems, and soot and smog from China's factory towns will create sever adverse economic and environmental impacts.

But the report may not have accounted for mitigating factors resulting from global warming, often cited by global warming skeptics, that could actually reduce atmospheric greenhouse gas emissions. One example: longer growing seasons and milder winters in the Northern Hemisphere could help plants absorb more carbon, and the types of plants that thrive could likewise suck up more carbon than their cold-loving predecessors.

Overall, though, the report should act as a powerful prod to the world's leaders as they enter into contentious talks over cutting back on carbon emissions, and balancing the economic cost of reducing environmental risks between developed and developing countries. Brazil has publicly stated it will have difficulty preserving the rainforest without Western aid. And developing countries have reiterated time and again that the developed world poured most of the carbon into the atmosphere and brought the world to this point long before every Chinese, Indian, or Brazilian citizen dreamed of owning a cell phone, let alone buying a car.

But know this. When your insurance company tells you the bill is likely going way, way up, it's time to start thinking about behavioral changes -- because these guys aren't doing it for the warm-fuzzy feelings.

Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.

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