Running Head: ECONOMIC IMPACT OF CLIMATE CHANGE 1

Economic Impact of Climate Change

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ECONOMIC IMPACT OF CLIMATE CHANGE 2

Table of Content

Cover page

Abstract

Introduction

Discussion/Analytical

Summary and Conclusion

Reference Page
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Abstract
The article evaluates the economic impacts of global warming. Estimates from studies
and research conducted to show that will have a limited implication in the short run. It is even
thought even to bring about positive externality. In the long term, it is when the negative
repercussions are felt to the point that they will even surpass the positive ones. The very hotter,
more impoverished, and lower-lying nations will be the ones that will get negatively impacted.
Climate change affects the economic growth of a nation as well as that of the whole world. Also,
it has been difficult to quantify the impacts brought by climate change. Climate change has had
implications on the agricultural output in different places globally. Emerging economies are the
worst hit. When the sector is affected by climate change, it goes further to affect other sectors of
the economy directly.
The emission of CO2, which comes from climate change, affects the agricultural sector
both in the short run and in the long-run. Climate change affects the land area, crops grown, and
energy consumption. Computable general equilibrium is a model used by economics to project
economic growth. There are policies that have been formulated to help curb the unfavourable
climate changes. One of them is Paris accord that illustrates possible catastrophes from climate
change and the strides that a nation can adopt to fight the menace.
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Introduction
There are accumulative implications of global warming that have impacted the world.
There has been sufficient evidence of how climate change has resulted in adverse weather
conditions that have brought about undesirable events like the melting of ice caps that have led to
the rise in sea levels. Agricultural production around the world has been severely hit, that's
according to the World Bank and United Nations reports. Nonetheless, there are standard
economic projections of the effect of the change in the climatic pattern. Their mild implications
now, but in the future, they are perceived to have a wavelength of the impact, including a series
of devastations. There are calls to have new models so that the climatic ruins are not felt in the
future (Ume, 2018). A proper view of the destructions should be provided in a more
accumulative picture so that humanity can become aware of the underlying catastrophic impacts
that can be realized if left unattended.
Undeniably, for now, there are limited attempts to examine the full worldwide,
disaggregated, and unfavorable impacts of global warming on the GDP of the nation. It is
expending large scale economic demonstration, the set up that can capture all the trading
configurations, spillover implications, and financial linkages among nations playing in the global
commercial platform. In the past few years, it is faced with complex computations where
computable general equilibrium (CGE) presentation on specific countries has swelling
implications, and forwarding engagement behavior is absent in most of these countries that helps
in maintaining a vibrant economy.
Climate change has brought about a negative externality on the economy, and there are
calls by many economists to have the current engagements that bring about these emissions to be
priced and even to be highly taxed so that it can be discouraged. Economists have concluded that
most of the effects start moderately, but they escalate with time, and this happens in the long-
term. Economists have called for halting of various undertakings that bring about greenhouse gas
emissions. There has been a bitter debate among economists on the issue to do with climate
change and its impact on the economy. They have called on adopting policies and research that
deal with climate change and its effects.
Primarily, this article helps divulge on how climate change impacts the economy of
countries. It reviews the interaction of climate change and economic development. The article
reviews and analyses social costs brought about by carbon as well as the Pigou tax. A review of
recent events and developments will feature in this study. In my view, I find that the economic
impacts of climate change, as well as climate, are relatively negative, and mostly, the less
developed nations are worst hit by these catastrophes that they cannot handle based on the low
capacity to manage them.
Discussion/ Analytical
The implications of climate change are diverse and numerous. There arises the case of
determining if the instances are beneficial or damaging, or they are huge or small in magnitude.
Generally, this happens based on the time factor, location, and sector involved (Darcan N. K. &
Silanikove et al.,2018). Areas affected by the worsening climate change are increasing heat
stress, drought, and cases of crops growing much faster because of the increased carbon dioxide
that helps in the fertilization process, cold pressure, sea levels rising. Infectious diseases are
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spreading, and the worst case of all is that different species are going extinct. There is the need to
have significant aggregate indicators that help evaluate if climate change is on balance. Another
thing assessed is whether climate change is good or bad for the economy, and in case of
problems that it brings about if they are big or small relative to the societal issues, it pauses.
According to research done, an increase of temperature by 2.5 degrees centigrade to a
reasonable person would have a loss of 1.3 % of their income, which is a significant portion to
and individual as well as the economy. Mainly, the impact gets measured by income loss and
welfare realized from activities, and it is primarily expressed as a percentage of income. There
are no perfect estimates that are in use, but the ones that are there have shown to help review the
global warming. Global warming tends to affect growth and inflation in the economy of a
country. In the long run, the general consequence of climate change on economic growth will
mostly be undesirable (Rezai& A.Taylor et al., 2018). The impact of escalating temperatures will
be prevalent even though there will be losers as well as winners from climate change at varying
levels of warming; this one is because of the financial-political and economic integration of the
economies of the world.
Generally, the likes of rising sea levels and extreme weather events tend to harm
economic output as businesses are impaired, and homes are damaged, making people suffer. The
world economy faces a severe challenge when the climactic events are recognized as permanent
features of the environment. Climate change is expected to rise the infrequency and severity of
extreme weather event cause losses (Bekele & Bekele, 2017). Unless measures are taken to
prevent future damage or the opportunity to move businesses to safer grounds, many tend to
figure out that it is not worth replacing capital stock. Climate change is mostly expected to
reduce capital stocks and productivity in the economy of the world. Food security is affected by
higher global temperatures and also tends to promote infectious diseases and impair those
working outdoors.
Global Warming
Global warming entails the continuing rise in the average temperature of the earth's
system of climate. Influence on humans has been the emission of gases from greenhouses that
emit methane and carbon dioxide gas, that affect the earth's atmosphere. Deforestation and the
discharge of the gases do affect the atmosphere that also plays a more significant role in the
change of climate like increased water vapor, snow cover loss. There are low-lying and densely
populated countries that are at risk of flooding by the sea, which is brought about by the excess
climate change impact.
Climate change could disrupt the availability of food, food reduction, and the quality of
the food. A decline in agricultural productivity may be brought about by the changes in extreme
weather events, and the changes in precipitation patterns. Climate change would contribute to the
insecurity of food by the increased prices and the reduction of the production of food (Graff
Zivin & Hsiang, 2018). Also, water may be rare for the production of food due to the drought
and crop water increase. Land competition may increase as some areas may become unsuitable
for production due to climate changes. Other reductions in the Agricultural activities that may be
due to significant events of weather, leading to increased rapid prices.
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The rise in temperatures may affect the migration of individual species and their habitats.
It is due to the temperature change of the climatic conditions that make these species to migrate
to higher cooler areas. Temperature levels may affect various parts of the areas covered by
forests, which are likely to be severely affected due to the temperature rise. If large areas parts of
these forests are destroyed, it may become terrible for the species living in the woods and the
people that rely on them.
Climate changes can be avoided in specific ways that will make the surrounding more
conducive. One of the changes is that of putting a significant price on carbon by using the
Carbon pricing systems that prevent emissions that charge per ton to reduce the behaviours of
pollution. Another change is that of end fossil fuel in that it would encourage waste and still
discourage the growth of low carbon. Thirdly there is the change of building a low carbon,
resilient sites that will, in the long run, increase chances of growth to sustain and the
establishment of standard energy efficiencies.

Greenhouse emission has a relationship with the level of temperature. The diagram above
illustrates that relationship.
Global coordination is an essential requirement for climate change, as it is a worldwide
occurrence. Global dynamics are natural candidates for policy analysis and the impact
assessment of global warming (Graff Zivin & Hsiang, 2018). Global dynamic CGE models
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incorporate regular policy examination and predicting approach for GDP growth, incomes, and
universal economic structures. The impact uncertainty is large; this is since climate change, and
the decrease in emissions tend to work together with other environmental issues and
development. Both global warming and decrease of the emissions have significant consequences
that affect efficiency as well as for equity. Also, climate change cannot be demarcated as strictly
economic difficult.
There is substantial evidence that economic growth is impacted by climate change. There
are findings that in developing countries, higher temperatures tend to reduce their income as well
as inconsistent rainfall mainly impacted on economic growth. Another finding is that long-term
growth in developing countries is due to hot and wet conditions and large variability in rainfall
(Coppock et al., 2017). It is essential to note that climate impacts cause either gradual or extreme
climatic events. Both gradual and extreme climatic happenings from a macroeconomic
perspective can generate effects in both demand and supply. Global warming mostly affects the
productive capacity of the economy through channels such as natural, physical, and human
capital impacts.
Global warming tends to mostly raise the frequency and strictness of extreme weather
events, hence leading to property and infrastructure loss. Generally, this is how global warming
influences economic growth through the loss of property, productivity, security threats, and mass
migration. The agricultural sector severely hit by climate change, and this causes the products to
go up, given the high cost of production. It causes floods in areas that produce agricultural
products, and this makes productivity go low. The limited products in the market have increased
prices because there is less in supply while there is more demand. Agricultural production
wholly depends on the weather pattern, and unfavourable climatic conditions result in reduced
output levels. Extreme weather conditions bring about drought, and floods which reduce food
production. Notably, this increases the food prices, which further translate to stressing the
consumer's level of income because there are more resources channelled to receive the portion of
food products that could have been got at a much-reduced price.
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The diagram above shows the rate of global warming against the welfare which is
equivalent to income
Increasing inflation can also materialize through decreased land availability. The swell in
global temperatures has made many parts of the world be uninhabitable to the majority of
humans. Generally, this has caused mass immigration, leaving the land unproductive. There is a
higher demand for a decreased amount of land. In addition, a human being has been made to live
in areas where they are heavily concentrated. Agriculture is much dependent on energy to have
favourable production (Bekele & Bekele, 2017). Generally, climate change has brought about
increased energy costs. There are areas where it is heavily reliant on hydroelectricity, and then
the area encounters drought making the rivers drain. Essentially, this makes the hydropower
station use other alternatives like generators, which push the cost of energy up. In particular, this
pushes the cost of production of agricultural materials up. The extreme weather conditions are
worse for working and living environments, and these results in reduced productivity.
Cost-Benefit Analysis
The Economic Effect of Climatic Change
Climate change results in the reduction of economic output, especially when we have
cases of the temperature increasing. The world's GDP growth has been lowering by 1% annually.
It is projected that by the year 2100, the economic output will be 50% lower than it would be if
there were no global warming. The developing countries are the ones who will face severe
impact when it comes to global warming. In Africa mainly, where there is a heavy reliance on
agriculture, there will be a reduction in crop yield, and therefore they will have little for the
sustenance of their economies. Also, these countries are bound to have strains on government
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budgets. Immense amounts of resources will be channelled for clear-up operations and
healthcare costs that come with having adverse weather conditions. Adverse weather conditions
have led to the eradication of farm animals that are kept for food. The named nations have
reduced capability to carry out research, and this is an adverse effect.

There is also the change of increase in the efficiency of energy, and the usage of the
energy that can be used again is affordable in the development of the utility-scale are at par with
fossil fuel plants. There is the change of implementing climate-smart agriculture and the nature
of landscapes, in that it will aid the farmers to increase the productivity of the farms and the
impact resilience of the climate change like drought and the creation of ventilators that aid in the
reduction of emissions (Ume, 2018). The usage of renewable energy is increasing and suitable
and more affordable as the prices fall. Through the cautious planning of usage of transportation,
the cities can avoid the locking of unsustainable patterns. The support of the banks helps to
provide support for fossil fuels to change. Hence it will support the countries to strategize and
device the subsidy changes that are associated with the social systems. Usage of the carbon-
pricing systems will help in the investments of cleaner energy and improvement of low carbon.
The world is experiencing growth in population, these calls for the need for food security.
The food and water greatly influenced by the change in the climate. Many less developed
countries do not have the required strategies and information to curb the growing climate change.
Greenhouse emissions come about because of the extra natural solar energy generated by the
surge in the ocean heat. Some strategies can be followed so that climatic change cannot
adversely affect humanity and their livelihood. One of them is the introduction of new crop
varieties that can withstand the harsh climatic conditions. The adaptation mechanism is the most
efficient way of ensuring that we are on par with the way the world is transforming climatically.
Conclusion
Climate change is a matter that encompasses the issues to do with public goods,
externalities, common property resources renewable as well as non-renewable resources. It
includes economic, technological, and political dimensions. For there to be economic
dimensions, other spheres have to play a part in having the issue of climate change adequately
addressed. Economic theory and policies are vital for offering help in matters to do with global
warming, and it can give out strategies that can be useful for helping address the menace.
An effective response to global warming menace necessitates that there may be more
actions on a global gauge than anything so far realized. Economists have come up with policies
that help curb the depletion of energy and are encouraging the use of energy-efficient techniques.
They are encouraging industrial development and encouraging the efficient distribution of
income. They are also helping in mitigating the unfavourable climate change. Clearly, in the
times we are living in now, there is the evidence of climate change being felt, and it is visible
with the melting ice caps, and the high temperatures and rainfalls realized. Economies around the
coastal areas are falling because of the increasing level of Ocean. It is projected that within a
time frame of a century, these lands along the coastline will be submerged in the waters.
Generally, this is a clear indication that their climate change is taking place. Though the effects
are gradual, the catastrophes are visible and real.
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The agricultural output globally will go down, and it will cause many instances of
famine, mostly in the third world nations who could face hunger and starvation because of
drought and floods that can wipe out their agricultural inputs (Huong, N. T. L & Bo et al.,2018).
Precautionary actions, incorporation of modern technology, and accurate weather forecasting
should get taken to help curb the menace and ensure greater techniques of irrigation and farming.
The policies and regulations should be made by the government and ensure that they are fully
implemented.
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References
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