London scoping - ukcip

Final Report
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8.5.14 Further Quantification of Economic Impacts
As a result of the link between the insurance and financial markets, the financial service sector
may also be impacted indirectly by climate change related extreme weather events. The size of
this impact will be determined by the extent that the insurance sector has been able to pass on
risk to other financial institutions. It is believed that the policy of portfolio diversification
which large financial institutions have will ensure that this risk will be reduced and the impact
mitigated. This conclusion is not well established and needs to be supported by further
research.
The economic costs of disruption to London transport systems was the economic impact most
widely identified by stakeholders in the consultation process. Detailed modelling of transport
flows to, and within, the city, in combination with climate change model scenarios, are required
to accurately assess the likely extent of such costs.
Further work is required to clarify the net balance of change in energy demand as a consequence
of climate change in London. The supply infrastructure network is vulnerable to windstorms
and clay shrinkage. The economic impacts of disruption to the power supply for extended
periods has not been estimated in quantitative terms but is believed to be significant.
Further work is required to clarify the uncertainty surrounding the net economic impact of
climate change on tourism and leisure. Revenues may increase as London - and the UK -
becomes a more attractive destination in summer relative to those in Southern Europe and
elsewhere that are likely to suffer from adverse climate change impacts. However, more trips
may be taken from London to escape, for example from uncomfortable temperatures.