Heavy rains have caused floods in China and South Korea, as well as disruptions in water and electricity supply in India, while drought has threatened farmers' harvests across Europe.
Such natural disasters cost economies hundreds of billions of dollars. According to the Emergency Events Database maintained by the Brussels-based Centre for Research on the Epidemiology of Disasters, last year's extreme droughts, floods, and storms resulted in global losses of more than $224 billion.
However, as climate change causes more intense rainfall, flooding, and drought in the coming decades, these costs are expected to skyrocket, according to a report released by engineering and environmental consultancy firm GHD.
Water can be "the most destructive force that a community can experience," according to Don Holland, who leads GHD's Canadian water market program.
GHD assessed water risks in seven countries with varying economic and climatic conditions: the US, China, Canada, the UK, the Philippines, the UAE, and Australia. The team estimated the amount of losses countries face in terms of immediate costs as well as to the overall economy by using global insurance data and scientific studies on how extreme events can affect different sectors.
Losses in the United States, the world's largest economy, could total $3.7 trillion by 2050, with US GDP shrinking by about 0.5% per year until then. China, the world's second-largest economy, faces cumulative losses of approximately $1.1 trillion by mid-century.
Manufacturing and distribution would be the hardest hit of the five most important business sectors, with disasters costing $4.2 trillion, as water scarcity disrupts production and storms and floods destroy infrastructure and inventory.
The agricultural sector, which is vulnerable to both drought and extreme rainfall, could suffer losses of $332 billion by 2050. Retail, banking, and energy are also facing significant challenges.
A global group of experts launched a new commission to research the economics of water at this year's World Economic Forum in Davos, Switzerland, with the goal of advising policymakers on water management.
According to commission co-chair Tharman Shanmugaratnam, we must "transform how we govern water and the climate together." "The costs are not insignificant, but they are dwarfed by the costs of allowing extreme weather to wreak havoc."