Economic effects of Climate Change

The combination of the weight of scientific evidence and the dynamics of the financial system suggest that, in the fullness of time, climate change will threaten financial resilience and longer-term prosperity. While there is still time to act, the window of opportunity is finite and shrinking.

Mark Carney, Govenor of the Bank of England, September 2015

Economy is an answer to How an individual or a nation makes and spends money? The GDP of a country shows how well the economy of that country works. Don't worry today we would not be going deep into economy. But this is an important factor in today's modern world. And for the start, let's look at some figures and stats.

According to an estimate, if the global temperature rises up by 2°C then it could cost 0.2% to 2% of today's global GDP ( it sounds small but the actual value is more over a trillion US dollars ). Coming onto the natural disasters, the most economically destructive disaster are Storms - including hurricanes, thunderstorms, and rainstorms currently cause 38% of the cost of disasters globally, because they can destroy houses, roads and other infrastructure.

Global warming - as the name says for itself, leads to the increase in the average global temperature resulting in more extreme weather conditions which often leads to more disasters and along with it comes the risk of public health and food services - for instance heatwaves, air pollution, worsening diseases, agricultural produce degradation and much more... This often would lead towards expensive food commodities, leaving behind less money with the public to be spent on restaurants, entertainment and tourism which in turn affects the overall economy of a region or the whole country.

After disrupting the mainstays of different economies and the general public, the question of inequality comes out at the top of it. And as many of you might have thought - the rich get more richer without facing any big issues while the poor get poorer facing more issues to deal with. This effect not only goes on for the general public but for nations all around the world. It’s estimated that developing countries will bear 75-80% of the costs of climate change, and the greater the warming, the higher these costs will be. So although inequality between rich and poor countries has decreased in recent decades, global warming is slowing this progress.

The poorer people spend more of their income on food. And as shown above, the food commodities gets more expensive with the advent of climate change and the cycle goes on and once again the gap between the rich and poor gets bigger and bigger. Check out the following figure for brief info.

Across countries in Africa, 70% of the working people are employed on farms, so agriculutre makes up a large part of countries' GDP. Even if richer countries lose more money in total, the proportion of GDP lost due to climate change will be highest in poorer countries.

But wait, Some countries and companies will benefit from climate change! Countries near the Arctic, like Canada and Russia, will be able to make money as the ice melts. Less ice will make it possible to reach gas and oil in the seabed and for ships to travel around the countries. So climate change would enrich the rich and badly affect the poor.

So, for the conclusion - the global economy would be less stable than the current situation and if we predict the possibilities based on statistics, its tough to answer many questions like - what is the worth of global ecosystems?

Stopping climate change, and preparing for the effects we’re too late to stop can reduce these costs and inequalities in the short and long term.

Next up - Some living stuff (extinction of species)

The time is past when human kind thought it could selfishly draw on exhaustible resources. We know now the world is not a commodity.

Francois Hollande, President of French republic