Climate Change And Its Economic Impact


The economic impacts of climate change are the part of the economics of climate change related to the effects of climate change. In 2019, climate change contributed to extreme weather events causing at least $100 billion in damages. 

By 2050, cumulative damages from climate change may reach $8 trillion, impoverishing by 3% of gross world product and the poorest regions by more of their gross domestic product (GDP). 

A 2017 survey of independent economists looking at the effects of climate change found that "estimates for future damages .ranges from 2% to 10% or more of global GDP per year. The Stern Review for the British Government also predicted that world GDP would be reduced by several percent due to climate related costs; among the factors they considered were increased extreme weather events and stresses to low-lying areas due to sea level rise. 

Insofar as their calculations may omit ecological effects that are difficult to quantify economically (such as human deaths or loss of biodiversity) or whose economic consequences will manifest slowly, these estimates may be low.

Damage to property and infrastructure




Sea-level rise, floods, droughts, wildfires, and extreme storms require extensive repair of essential infrastructure such as homes, roads, bridges, railroad tracks, airport runways, power lines, dams, levees, and seawalls.

In a literature assessment, Wilbanks et al. (2007:377) concluded, with high confidence, that the economic costs of extreme weather events, at large national or large regional scale, would be unlikely to exceed more than a few percent of the total economy in the year of the event, except for possible abrupt changes.In smaller locations, particularly developing countries, it was estimated with high confidence that, in the year of the extreme event, short-run damages could amount to more than 25% GDP.

According to Tol (2008), roads, airport runways, railway lines and pipelines, (including oil pipelines, sewers, water mains etc.) may require increased maintenance and renewal as they become subject to greater temperature variation and are exposed to weather that they were not designed for.

Lost productivity



Disruptions in daily life related to climate change can mean lost work and school days and harm trade, transportation, agriculture, fisheries, energy production, and tourism. Severe rainfall events and snowstorms can delay planting and harvesting, cause power outages, snarl traffic, delay air travel, and otherwise make it difficult for people to go about their daily business. Climate-related health risks also reduce productivity, such as when extreme heat curtails construction, or when more potent allergies and more air pollution lead to lost work and school days.

An increase in heat stress resulting from global warming is projected to lead to global productivity losses equivalent to 80 million full-time jobs in the year 2030, according to a new report from the International Labour Organization (ILO).

Projections based on a global temperature rise of 1.5°C by the end of this century suggest that in 2030, 2.2 per cent of total working hours worldwide will be lost because of higher temperatures, a loss equivalent to 80 million full-time jobs. This is equivalent to global economic losses of US$2,400 billion.

Moreover, the report cautions this is a conservative estimate because it assumes that the global mean temperature rise will not exceed 1.5°C. It also assumes that work in agriculture and construction – two of the sectors worst affected by heat stress – are carried out in the shade.

Mass migration and security threats




Environmental migrants are people who are forced to leave their home region due to sudden or long-term changes to their local environment. These are changes which compromise their well-being or secure livelihood. Such changes are held to include increased droughts, desertification, sea level rise, and disruption of seasonal weather patterns (i.e. monsoons. Climate refugees may choose to flee to or migrate to another country, or they may migrate internally within their own country.

Despite problems in formulating a uniform and clear-cut definition of environmental migration, such a concept has increased as an issue of concern in the 2000s as policy-makers, environmental and social scientists attempt to conceptualize the potential societal effects of climate change and general environmental degradation. "Unless it is assumed" in order to consider a person a climate refugee, nature or the environment could be considered the persecutor.

Global warming is likely to increase the number of "climate refugees"—people who are forced to leave their homes because of drought, flooding, or other climate-related disasters. Mass movements of people and social disruption may lead to civil unrest, and might even spur military intervention and other unintended consequences.

Coping costs




Societies may find ways to prepare for and cope with some climate impacts—provided that we do not let our carbon emissions continue unabated. However, even a partial accounting of these measures suggests that coping is likely to be more costly steps to reduce carbon emissions thereby reducing associated climate impacts.

For example, farmers might need to irrigate previously rain-fed areas, cool vulnerable livestock, and manage new or more numerous pests. Local and state governments that taker early steps to ensure that houses are more energy efficient, and build early warning systems for heat waves and disasters and add emergency responders are more likely to cope with extreme events. Governments may also have to build seawalls, contain sewer overflows, and strengthen bridges, subways, and other critical components of the transportation system.

Rebuilding after disasters strike is likely to prove even more costly than these preventive measures, studies show. And these costs do not include those stemming from lives lost and other irreversible consequences of allowing heat-trapping gases to accumulate unchecked in our atmosphere.


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