The World Bank Just Warned That Climate Change Could Cut Malaysia’s GDP by 8 Percent by 2050 – The Same Math Applies to American States.

As is customary, the latest World Bank report on Malaysia arrived last week in a low-key manner, drowned out by the more pressing cacophony of currency fluctuations and earnings season. However, after some time, the figures begin to feel more like a mirror held up to a long row of American states that have been acting as though the math doesn’t apply to them than like a story about Southeast Asia. In the worst case, climate impacts could reduce Malaysia’s GDP by up to 8.3% by 2050, according to the Bank. In the worst case scenario, the nation might lose over 20% of its output in a single year if a once-in-20-year flood occurs in the same year as a protracted period of intense heat. These figures are not abstract. These are the kinds of figures that subtly reshape the future of a nation.

The underlying drivers are strikingly familiar to anyone watching the United States. Labor productivity is being undermined by heat stress. Flooding is a result of rapid urbanization on previously water-absorbing land. Nearly a fifth of the value of agriculture is being lost. In the 2040s, tourism revenue is expected to decline by more than 21%. The report could practically be reissued without altering the conclusions if Kuala Lumpur were substituted for Houston or Penang for Miami.

Reading it gives the impression that Malaysia is merely operating on a slightly different timeline from Phoenix, New Orleans, and Tampa. Last summer, Phoenix recorded 113 days with temperatures above 100 degrees. For years, insurers in Louisiana have been stealthily pulling out of coastal parishes. Off the record, economists describe Florida’s real estate market as unpriced due to its constant absorption of storms. Even though no governor is willing to put a precise percentage to it in public, the World Bank’s 8.3 percent figure for Malaysia is the kind of figure that a state-level economist in the United States might recognize as familiar.

This could be the point at which the comparison becomes awkward. At least in theory, Malaysia is creating the report, estimating the harm, setting the price for carbon, and increasing green exports from US$3 billion in 1995 to US$37 billion in the present. In contrast, American states typically contract out this type of accounting to reinsurance firms and think tanks. Texas does not actually have a Country Climate and Development Report. There most likely ought to be.

As this develops, it’s difficult to ignore the discrepancy between the modeling’s accuracy and the political acceptance of its implications. The Bank’s rhetoric is almost tactful: take decisive action, seize economic gains, and prevent future growth from being lost. It sounds something like this when translated into American terms: quit acting as though the power grids, insurance markets, and agricultural belts can withstand another 25 years of this without complaining. It appears that investors are already subtly accounting for it. Even though it isn’t mentioned on the cover memo, municipal bond desks have been pricing climate risk into Gulf Coast issuances for at least three years.

In a week, the Malaysia number will disappear from the news cycle. The underlying math won’t. There is a draft economic forecast somewhere in the state capitol in Tallahassee or Baton Rouge that already understands what 8% feels like. Whether or not anyone wants to say it aloud is still up for debate.