Take Brexit Britain and Trump’s America. Add climate change, instability in the Middle East, cryptocurrencies, and self-driving cars… and you have the world in 2018: hopeful, yet seemingly unpredictable.

We have assembled 11 unlikely events that - if they somehow happened - have the potential to profoundly affect the world as we know it.

To assess the political, economic, financial, and social impacts, IG brought together global economic/political experts to give their perspectives and predictions.

Explore some of the great unknowns facing us all today

great barrier reef

What If

The Great Barrier Reef dies due to climate change

Pic: Wise Hok Wai Lum

Over the last two years, more than a third of the coral in the northern and central parts of the Great Barrier Reef have been lost to ‘bleaching’ – where ocean temperature rises cause coral colonies to die, taking fish and other sea life with them. Scientists have been warning about the effects of climate change on this vulnerable ecosystem for decades, so the environmental effects are well known and understood. But what would the political, economic, financial and social repercussions be if this irreplaceable wonder disappeared entirely?

Category: Environment Region: Australasia

map of Australia

Our panel of experts (interviewed March-May 2018):

Thomas Hale

Thomas Hale

Associate Professor of Global Public Policy, University of Oxford

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Dr Thomas Hale is Associate Professor of Global Public Policy and Director for China Engagement at Blavatnik School of Government, University of Oxford. He holds a PhD in Politics from Princeton University, a Masters degree in Global Politics from the London School of Economics and an AB in public policy from Princeton’s Woodrow Wilson School. Hale has published four books, most recently Beyond Gridlock and Between Interests and Law: The Politics of Transnational Commercial Disputes.

 Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

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Robert Kelly is a Professor in the Department of Political Science and Diplomacy, Pusan National University in South Korea. His work focuses on international security and political economy. His areas of interest are East Asian security, US foreign policy, the Middle East, the World Bank and the International Monetary Fund. Kelly has appeared as an analyst on television news services, including the BBC and CNN.

Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

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Chris Beauchamp started at IG in 2010, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News. His background is in equity research and analysis, and he uses these skills to provide in-depth reports on stock market movements.

[ What if this happened? ]

Thomas Hale
Thomas Hale
The effect on biodiversity would be severe and permanent, though too little is understood to know what the longer-term effect on commercial fisheries would be. Fisheries in the region are already severely stressed, so this could become a ‘nail in the coffin’ for the industry.
Robert Kelly
Robert Hale
There would be noticeable tourism contraction in Australia and a passing global anxiety about global warming, but not enough to really stop it.
Christopher Beauchamp
Christopher Beauchamp
I think, from an economic perspective, the biggest effect would be the hit to tourism. You’d see that in Australian economic activity, people wouldn’t be visiting quite as much. That would hit economic growth, certainly in some parts of Australia that are dependent on tourism. The effect would probably be quite limited in the near term, I’d suspect. You might get a knock-on effect of visitors moving to other places that would have that kind of tourist attraction, so other parts of East Asia and Australasia might see an improvement.

[ Likelihood ]

We asked our experts to rate how likely it is that the Great Barrier Reef will die due to climate change.

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[ Impact ]

Panel members also rated the impact they would expect this event to have.

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The Political Impact

Thomas Hale

Thomas Hale

Associate Professor of Global Public Policy, University of Oxford

In the international climate process, vulnerable countries, particularly Pacific islands, have been pushing large emitters of greenhouse gases to directly compensate them for loss and damage from climate change. A large-scale impact on a developed country such as Australia could potentially shift the politics of this from a primary developed/developing country division to a more cross-cutting one, strengthening the issue’s traction in the UN process.
Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

The costs of reversing global warming are far too high, diffuse, and future-loaded for contemporary politicians to risk the electoral and economic costs. There will be some sad TV documentaries and stories, but that will pass; a much greater economic crisis driven by global warming is necessary to push major change. I just don’t see this as a big deal. Most of the costs of global warming, such as this, or the melting of the polar ice cap, are now baked in. There are ecological catastrophes to be sure, but they are slow moving and the costs future-loaded. That gives a lot of time to adjust and for selfish current generations to push costs onto their kids, which they will inevitably do. Few democratic politicians will risk the costs for the major lifestyle adjustments global warming demands. So the Reef is already doomed and will attract media attention, because it is so high profile. But nothing will come of it.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

You might see a shift towards a Green Party element to some degree in Australia, which might unbalance the country’s politics. You might see the emergence of a party looking to reduce pollution or enact measures in various forms that would look to combat the impact of pollution. There could be a knock-on effect in other parts of the globe – other people would look at what’s happened there and take a view that a party with green policies would see a shift in the right direction.

The Economic Impact

Thomas Hale

Thomas Hale

Associate Professor of Global Public Policy, University of Oxford

The effect on tourism and fisheries would be severe locally, but probably not of broader significance. Innovative biotech companies are increasingly looking for medical compounds in ocean biodiversity and could suffer.
Robert Kelly

Robert Kelly

Professor of Political Science and Diplomacy, Pusan National University

There would be a minor hit to Australia’s tourism industry.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

These things tend to reverberate through the system, so if you have a government pushed to higher taxation on industry in order to introduce climate legislation then that would perhaps hit economic growth, certainly in the near term. A government that was encouraging other forms of energy and other forms of industry might see economic growth improve in other areas. You might see new industries spring up, certainly an improvement in solar and other energy resources, whereas traditional industry could get a hit – so these things may work in both directions.

The Financial Impact

Thomas Hale

Thomas Hale

Associate Professor of Global Public Policy, University of Oxford

There is a groundswell of climate-based litigation popping up around the world, with both governments and companies being sued under various kinds of laws for inaction on, or culpability in, climate change. These suits will continue to grow and could have massive effects on the sector, akin to legal actions against tobacco. A Great Barrier Reef die-off would introduce a new set of plaintiffs, such as fishermen and tour companies, and potentially even the Australian or Queensland governments.
Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

The Australian dollar may take a hit with reduced tourism – people are concerned in that sense. It also depends on the knock-on effects from policies introduced in the wake of it that might concern people about economic growth, at least in the near term, which would mean a shift away from the Aussie dollar for the shorter-term. This, of course, has its own benefit because if you have a weaker currency it tends to promote economic growth.

The Social Impact

Christopher Beauchamp

Christopher Beauchamp

Market Analyst, IG

You might see a slightly more insular approach from Australia if you had a reduction in tourism but I think it’s something that you shouldn’t read too much into. Given the broad nature of Australian tourism, people go to the Great Barrier Reef but you go to Australia for other things as well, so I think it’s easy to overstate the major risks in that sense.
Thomas Hale

Thomas Hale

A highly-visible crisis like this could become a tipping point to prompt more support for environmental protection and action on climate change.

Find out about another risk facing the world in 2018 and beyond

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