A financial reckoning is coming—and we are not prepared.
For years, climate scientists have warned us of rising temperatures, extreme weather, and ecological breakdown. Now, the very people who calculate financial risk—actuaries—are sounding the alarm. Their latest report projects a 50% collapse in global GDP within decades. That’s not a recession. That’s economic devastation on a scale we’ve never seen.
Entire industries could crumble. Pensions could vanish. Insurance could become unaffordable. The financial foundation of modern life is at risk—and yet, mainstream economic forecasts still assume “business as usual.” Why?
According to a new report by the Institute and Faculty of Actuaries (IFoA) in collaboration with the University of Exeter, global GDP could contract by 50% between 2070 and 2090 if climate change remains unchecked. This is not an abstract environmental warning; it is a projection based on rigorous financial risk assessments.
Actuaries are among the most conservative and data-driven financial professionals in the world. Their calculations underpin trillions of dollars in insurance pricing, pension fund allocations, and investment decisions. If they are warning of an impending financial catastrophe, why is the broader economic community not taking it seriously?
Sources: Be An Actuary, American Academy of Actuaries
Actuaries: “Planetary Insolvency” Looms Without Urgent Action
In the newly published report, Planetary Solvency – Finding Our Balance with Nature, the IFoA and the University of Exeter make a stark declaration:
“The risk of Planetary Insolvency looms unless we act decisively. Without immediate policy action to change course, catastrophic or extreme impacts are eminently plausible, which could threaten future prosperity.”
For decades, economic models have downplayed the risks of climate change, treating damages as incremental rather than systemic. But the severity and frequency of extreme events are already beyond model projections—threatening mass mortality, economic collapse, and widespread conflict if we fail to act.
These findings reinforce actuaries’ latest warnings: the global economy is not prepared for climate-driven shocks. The mainstream financial world still treats these risks as distant possibilities—but the data suggests otherwise. A 50% GDP collapse is not just a worst-case scenario; it’s a plausible outcome unless we change course immediately.
Why Are Economists Ignoring Actuaries’ Warnings?
Despite these findings, most economic models still fail to integrate climate-driven shocks into their long-term forecasts. There are several reasons for this disconnect:
1. Traditional Economic Models Underestimate Extreme Events
Many macroeconomic models assume a gradual warming scenario rather than abrupt, compounding crises. The widely used DICE model, developed by Nobel laureate William Nordhaus, predicts only a modest percentage drop in GDP per degree of warming. In stark contrast, actuaries use probability distributions that account for high-risk, low-probability events such as extreme weather, supply chain disruptions, and mass migration.
2. Short-Term Thinking in Economic Forecasting
Mainstream economic forecasts often discount future risks, meaning that the financial impact of climate disasters is given less weight in present-day decision-making. In contrast, actuarial models look decades ahead, reflecting the long-term liabilities of pension funds, sovereign wealth funds, and infrastructure investments.
3. Over-Reliance on Historical Growth Trends
Economists often project future growth based on historical trends, assuming cyclical downturns followed by recoveries. But climate-driven GDP shocks will not behave like past recessions. Instead, they could lead to permanent economic contraction in vulnerable regions and industries.
50% GDP Loss Predicted by Actuaries: A Grim Outlook for Today’s 25-Year-Old
To grasp the significance of a 50% decline in global GDP, consider someone who is 25 years old in 2025. By 2070, this individual will be 70 years old—precisely when the IFoA projects the deepest economic impacts could materialize. Here’s how that might play out:
Retirement Savings Collapse
After a 45-year career, you hope to retire just as global GDP has halved. Even well-managed pensions face severe headwinds when the broader economy craters. Governments, weighed down by disaster relief and falling tax revenue, may reduce social security benefits or raise retirement ages significantly.
Private pension funds that once relied on steady market growth could be forced to cut back payouts or go insolvent, leaving you with only a fraction of the retirement income you anticipated—even if you’d built substantial savings.
Homeownership Becomes Fraught
If you purchased property in a vulnerable region, there’s a real chance your insurance premiums skyrocketed or coverage was outright revoked. Property values may have collapsed, trapping you with an asset you can’t sell.
Even homeowners in safer areas can be forced to move if soaring insurance premiums, higher property taxes, and recurring climate-related damage make staying put unaffordable. Not even wealth guarantees stability if your equity erodes faster than you can adapt—or if entire neighborhoods become uninsurable.
Dim Employment Prospects—Even for Retirees
By your 70s, you might need to keep working because of eroded pensions and ballooning living costs. Yet a decades-long GDP decline devastates business investment and stifles new ventures. Entire industries may relocate or fail outright due to repeated climate shocks, leaving your hard-earned skill set underutilized or obsolete.
Older workers who can’t afford to retire compete with younger job seekers in an already stagnant market. Wages remain suppressed, underemployment is widespread, and the prospect of finding meaningful, well-paid work becomes increasingly remote. Even the wealthiest can lose significant capital if real estate, stocks, and business ventures go sour together.
Social Turmoil and Health Risks
Mass migration from increasingly uninhabitable or uninsurable areas strains public services. Healthcare systems in some regions may be overwhelmed by climate-related illnesses and infrastructure collapse.
Political tensions rise over resource allocation, with social unrest more frequent. Even if you’ve planned carefully, “aging in place” could mean navigating power outages, volatile food prices, or civil strife—stark realities in a world grappling with half its previous economic capacity. No one, from the lower-income to the ultra-rich, is fully insulated from a rapid, systemic decline in the global economy.
In short, for someone just starting out in 2025, the years surrounding 2070 could bring an economy half its current size—a severe, persistent slump that depletes savings, derails careers, and degrades public services.
But this isn’t just about individual hardship—it’s about a society-wide unraveling. When financial systems collapse, governments lose the ability to provide safety nets. Social stability erodes. Unlike past recessions, the global economy won’t simply “bounce back.” This isn’t a downturn—it’s a fundamental breakdown of the systems we rely on.
The warning signs are flashing. The only question is: will we listen in time?
Will the Climate Crisis Lead to a Financial Crisis?
Professor Tim Lenton—one of the report’s co-authors—brought these concerns to this year’s World Economic Forum in Davos, where the panel “Will the Climate Crisis Lead to a Financial Crisis?” was hosted by We Don’t Have Time. During the discussion, Lenton underscored how climate tipping points could rapidly erode GDP and destabilize financial markets. Fellow panelists noted that today’s economic models tend to drastically underestimate the severity of these cascading risks.
The panel reinforced what the Planetary Solvency report makes clear: “Our current market-led approach to mitigating climate and nature risks is not delivering”. If governments, businesses, and financial institutions continue to sidestep worst-case scenarios, a half-century of gains in global prosperity could be undone in a matter of decades.
A Call to Action from Actuaries
For someone turning 70 in 2070, a 50% GDP loss could mark the culmination of a lifetime of mounting risk, where everything from pension funds to property values crumbles, and social safety nets erode under relentless economic pressure.
Actuaries are not speculating—they’re calculating. If experts trained to price risk are warning of collapse, why are financial leaders still ignoring them?
We must change course now. We need to integrate realistic climate-risk scenarios into our economic models, influence public policy with accurate data, and shift financial systems toward true sustainability. If we wait, we won’t be debating economic forecasts—we’ll be dealing with financial collapse.
If you find this article compelling (or alarming), please leave a comment below and share it with others who speak the language of mathematics, finance, and risk management—they may be shocked by what they read, but that shock could spark the momentum we need. The more people who understand these numbers, the harder it will be to ignore the looming threat. Let’s encourage those with the power to act—bankers, insurers, policymakers—to resist the status quo and safeguard the future for all.
Actuaries aren’t speculating—they’re issuing a final warning. Their 50% GDP collapse projection is based on the accelerating severity of extreme events, the risk of compounding tipping points, and the systemic fragility of the global economy. If we ignore them, financial collapse won’t be a distant threat—it will be our reality.
Read the full article here
