Disaster-hardened Japan faces enormous costs from climate change

Japan is no stranger to the catastrophic power of natural disasters, with the Noto earthquake a little over a year ago being one of the latest in a long list of calamities to hit the country.

The frequent nature of these disasters has led the nation to build an expertise in disaster resilience that has headed off the kind of damage seen in other countries from similar events. Despite that knowledge, recent research shows Japan still suffers from some of the highest costs in the world — and that climate change, which is primarily caused by the burning of fossil fuels, will likely compound those costs further.

Japan’s bill for climate change-related damages in the decade through 2023 came in at $90.8 billion, behind only the United States, China and India — all three of which dwarf Japan’s population and land mass — according to a report compiled late last year on behalf of the International Chamber of Commerce.

That may soon be seen as small fry.

Under current global climate commitments, the total cost in climate damages through 2050 could amount to ¥952 trillion ($6 trillion), according to a December analysis — far more than the nominal value of the entire economy, ¥591.9 trillion, as calculated by the Cabinet Office last year.

Disaster risk

From the Noto quake last year and Typhoon Hagibis in 2019 to the March 2011 earthquake and tsunami, Japan has seen its fair share of natural disasters over the past quarter century. And warnings last summer of a Nankai Trough megaquake served as yet another reminder that more are always in store.

Unsurprisingly, that makes Japan one of the most disaster-affected countries in the world.

The country ranked sixth on the Disaster Risk Index compiled by global telecommunications company Intersec late last year, which was based on a per capita comparison of the deaths, injuries and economic damage caused by disasters across nearly 160 countries from 2000 to 2024.

Japan’s ranking was driven by $2.35 trillion in economic losses and 543 deaths and injuries when adjusted for the country’s estimated population of 124 million. In fact, the results, which indicate how the same absolute number of casualties can have a deeper impact on small countries, underscore Japan’s success in containing the human toll of natural disasters.

“If the rankings focused solely on economic damage per capita, Japan would likely rank higher,” said Charlotte Cardona, marketing and communications director at Intersec.

The March 2011 disaster played a significant role in those costs, but geography also has an important bearing on Japan’s risk factor — island nations made up the majority of the top 10 most “disaster impacted” countries.

Geographic vulnerability caused by longer coastlines, a concentration of assets brought on by more densely-packed urban areas, as well as resource limitations often caused by smaller populations and land combine to make islands exceedingly vulnerable to catastrophic damage, Cardona explains.

Cardona said the report “underscores the critical need for enhanced preparedness” in high-risk countries.

“While the study highlights the devastating human and economic tolls, it also points to the importance of investing in early warning systems, infrastructure resilience and disaster response strategies,” Cardona said. “Such investments are essential because they can save lives, reduce economic losses and protect vulnerable communities from the growing frequency and intensity of natural disasters.”

The price of inaction

The importance of investments like these are being stressed by new studies that predict future extreme weather events will increase climate change-related damages.

In the lead-up to COP29 last November, a study commissioned by the International Chamber of Commerce analyzed nearly 4,000 extreme weather events across the world that occurred from 2014 to 2023. The economic losses to the global economy caused by these events in terms of physical damage and human deaths amounted to $2 trillion, the analysis found.

The study focused exclusively on what it labeled “acute impacts,” which it classified as typically shorter-term extreme weather events, such as floods, hurricanes and wildfires. It found these events are occurring more frequently at higher levels of intensity as global temperatures rise and atmospheric and hydrological patterns shift.

“Climate change is not a future problem. Its impacts are being felt in the here and now,” John Denton, secretary-general of the chamber, wrote in the introduction of the report.

If the “chronic impacts” of climate change — such as extreme temperatures, sea level rise and changes in precipitation patterns — on ecosystems, agricultural productivity and human health were considered in the study, the reported losses to the global economy would likely have been higher.

In terms of countries, the $90.8 billion cost the study found for Japan placed it between India at $112.2 billion and Germany at $65.4 billion.

“There is a real and tangible cost to delaying the action needed to stem climate change,” Denton wrote. “From a business perspective, the urgency of coordinated and collective action to accelerate emissions reductions and build resilience to changing weather patterns cannot be overstated. Simply put, the time for action is now.”

Globally, total losses from natural disasters amounted to $320 billion in 2024, with $140 billion of these insured, said insurer Munich Re in a report Thursday. Those were the fifth and third highest losses since 1980, and both were significantly higher than 10- and 30-year averages.

“Climate change is showing its claws,” the world’s top insurer said.

Even greater costs could be in store.

If current global climate policy trajectories continue, climate change would lead to an almost 10% annual hit to Japan’s gross domestic product, according to new economic modeling by the Asia Investor Group on Climate Change published in December, which used data from more than 140 central banks, including the Bank of Japan.

The ¥970 trillion in total losses from climate change through 2050 would translate to “hundreds of thousands of yen being lost by Japanese households annually,” the report found. The impact on Japan is forecast to be higher than it is for the U.S. and Europe.

While these predictions are grim, Japan has the potential to make a significant contribution to greenhouse gas emissions reductions both domestically and globally, given its possible leadership in areas such as batteries and offshore wind, the report said.

The report stated that under a net zero scenario — meaning carbon emissions are reduced to a level that can be absorbed by nature and other removal measures — the economy would see a ¥13.6 trillion boost annually by 2050. Annual savings by that point compared with the scenario under current climate policies would be about ¥40 trillion.

At the same time, Japan is also leading Asia in financial support for the United Nations-led Loss and Damages Fund for developing countries similarly vulnerable to climate change-fueled disasters. While Japan’s contribution is a mere $10 million and the total fund of approximately $720 million is often criticized for being not nearly enough — particularly given developed countries’ historical responsibility for planet warming emissions — such funding underlines just how wide ranging the costs of climate change are.

Japanese households are already feeling the impact of climate change through the increased cost of insurance.

In October 2024, the nation’s four major nonlife insurance companies raised fire insurance premiums for individuals by an average of about 10% nationwide — the fourth increase since 2019 — due to the increased financial burden from natural disasters. In an announcement in 2021 that an advisory fire insurance rate would be raised, the General Insurance Rating Organization of Japan explicitly tied the move to climate change driving a higher risk of natural disasters.

Indeed, the ‬Insure Our Future climate campaign group said in a report at the end of last year that “climate change had accounted for an estimated $600 billion, or over a third, of global insured weather losses”‭ from 2002 to 2022.

“Our planetary body is on life support with organ failures on the horizon,” said Risalat Khan, author of the report and a senior strategist for Insure Our Future. “It is within our power to forge a common mission across willing governments, bold industry voices and a powerful civil society and media to cut emissions today and insure tomorrow.”