Source:BusinessGreen

Nations across the world have been told to adopt drought management policies as a matter of urgency, as estimates of the cost to insurers of this year’s dry summer in the US skyrockets.

The ripple effects of America’s worst drought in more than half a century on global food markets shows the vulnerability of an interconnected world to a hazard that is expected to increase in frequency as a result of climate change, UN agencies including the World Meteorological Organization (WMO) and the UN Convention to Combat Desertification (UNCCD) cautioned yesterday.

US farmers have experienced some of the worst growing seasons in living memory, with blistering temperatures destroying 35 per cent of the soya crop, while corn production is expected to fall to its lowest level since 2006 despite more corn planted than any time in the last 70 years.

According to the US Drought Monitor, as of 31 July, almost 63 per cent of the mainland US was experiencing moderate to exceptional drought.

The WMO yesterday called for the rapid adoption of policies that will promote water conservation and reduce consumption, and is summoning ministers and officials to a high-level meeting in March next year to discuss wider uptake of water management best practices.

The advantage of a fixed policy, rather than disaster management, is that action has to be taken regardless of the political situation, the body said.

“Climate change is projected to increase the frequency, intensity and duration of droughts, with impacts on many sectors, in particular food, water and energy,” said WMO Secretary-General Michel Jarraud. “We need to move away from a piecemeal, crisis-driven approach and develop integrated risk-based national drought policies.”

The UN warning comes the day after a report by HSBC said the rising food prices caused by failed US crops would drive up inflation and present a sizeable obstacle to economic growth. Ratings agency Standard and Poor’s also said the drought is likely to cost private crop insurers such as Wells Fargo and Ace in excess of $5bn.

This week also saw a coalition of green NGOs publish the latest update of the Water for Business Guide aimed at helping firms identify tools to help curb their water consumption.