Why Climate Migration Is The Next Economic Shock—And Opportunity

Forbes

4 days ago

APACHE JUNCTION, ARIZONA - AUGUST 02: The remains of a fallen saguaro cactus (2nd L) decays in the ... More Sonoran Desert on August 2, 2023 near Apache Junction, Arizona. The cacti are threatened by a number of issues linked to climate change and are under increased stress from extreme heat during Arizona's brutal summer heat wave. Three saguaro cacti have lost an arm or fallen over in the past week at Phoenix's Desert Botanical Garden. The saguaro is the largest cactus in the nation, living as long as 150-200 years and reaching heights of over 50 feet. (Photo by)
Phoenix highlights a core truth about climate migration: a city can boom economically while teetering on the brink of ecological collapse. In 2024, nearly 85,000 new residents moved in—despite persistent drought, searing heat, and shrinking water supplies.
Yet, that growth persists under serious environmental threats. Phoenix has previously gone 154 consecutive days without rain, enduring relentless summer heat that has exceeded 110°F. Utility costs are increasing as Colorado River cutbacks take effect—just as suburban sprawl and water-heavy data centers expand.
It's the ultimate paradox: Phoenix is prospering atop ecological quicksand.
I've written extensively about climate migration in the Global South. But we now face a more immediate reckoning at home. Climate migration is no longer just a humanitarian concern. It has become an emerging economic force that is reshaping markets, labor flows, and asset values. Companies that spot this trend early and invest in the right areas stand to gain. Those that don't may drown, figuratively speaking.
The climate economy is evolving faster than most boardrooms realize. Migration patterns are shifting demand for housing, services, and labor—both within and across national borders.
As PwC Global Chair Bob Moritz told edie.net, 'If businesses are to thrive over the short and long term, build trust, and deliver sustained and long-term value, they must accelerate the pace of reinvention.'
This isn't alarmism. It's actuarial math. According to a 2021 World Bank study, internal displacement is projected to affect 216 million people by 2050. Sub-Saharan Africa and East Asia are most affected.
Climate migration will be more economically disruptive than the 2008 financial crisis—only slower, messier, and far less reversible. We know about the threat. The question is, how will we react to it?
Supply Chain Disruptions
Central American migrants, taking part in a caravan heading to the US, rest at a temporary shelter ... More in Irapuato, Guanajuato state, Mexico on November 11, 2018. - The trek from tropical Central America to the huge capital of Mexico is declining the health of the migrant caravan that endures extreme climate changes, as well as overcrowding and physical exhaustion, and still has to face the desert that leads to the United States. (Photo by ALFREDO ESTRELLA / AFP) (Photo credit should read ALFREDO ESTRELLA/AFP via Getty Images)
Moreover, emerging research from King's College London estimates that up to $24 trillion in supply-chain disruptions by 2060 could result from climate change influencing labor pools, resource allocation, and migration flows.
'Floods, storms, droughts, and fires have already disrupted supply chains, halting production and eroding revenue,' noted the McKinsey Global Institute. 'As extreme weather becomes more frequent, supply chain disruptions will only become more common.'
Resilience isn't a touchy-feely measure. It's a shareholder value. Companies that prepare can secure capital, key technologies, and maintain market share. The scale of required investment is enormous. McKinsey estimates the world must spend $9.2 trillion each year through 2050 to reach net-zero targets. But the alternative is even more costly: mass migration, strained infrastructure, falling asset values, and overwhelmed markets.
No place is immune. Idealized havens have experienced wildfires, floods, and hurricanes. A 2024 Deloitte survey found that 40% of people in the U.S., Europe, and advanced Asian economies consider climate risk when choosing where to live. Even if a small fraction acts on that instinct, it could lead to significant population shifts—draining talent, straining infrastructure, and reshaping local economies.
This process is already happening in Central America, where rising temperatures are disrupting livelihoods in rural Honduras and Guatemala. This isn't just about weather—it's about the collapse of agricultural systems that have supported regional economies for decades.
Coffee growers, textile companies, and food exporters are rethinking operations as workers abandon entire growing areas. Companies now need to relocate, retrain, or rebuild supply chains. U.S. businesses relying on those connections are already feeling ripple effects—both through disruptions and new opportunities.
'You're looking at extremely fragile countries,' said Oliver-Leighton Barrett of the Center for Climate and Security, in Inside Climate News. 'These farmers don't have the resilience to endure a season with no crops. They're usually the first casualties. They can't feed their families. They're going to migrate.'
Rethinking Risk Calculations
From tech companies in Phoenix to food exporters reliant on Central American labor, a reshuffling is underway. Water scarcity, heatwaves, and migration are forcing a reevaluation of risk calculations. Companies that adapt—by relocating operations, diversifying supply chains, or investing in resilience—will gain a competitive edge. Those that don't may suffer steep losses.
Major insurers, such as Swiss Re and Munich Re, are already incorporating climate migration into their long-term risk models. Utilities and infrastructure firms are also preparing. American Water Works, for example, emphasizes regulated returns and long-term capital planning for resilience.
'Large corporations can have a massive impact on climate change,' said Ram Ramachander, CEO of Hitachi ZeroCarbon, in a McKinsey interview. 'But agility remains a challenge—especially compared to entrepreneurial organizations.'
This isn't a problem we can shelve and think about later. It's already happening. Indeed, climate migration is prompting the labor pool to reassess where it wants to live, which in turn affects supply chains, infrastructure development, and potential tax revenues. Adaptation is, thus, imperative.
Companies that stay ahead of this shift won't just survive—they'll lead, creating new wealth and opportunities in the process. The same goes for cities already in the spotlight. The climate migration economy isn't coming; it's already here. The only unanswered question is whether we've prepared for it or ignored the obvious.