Shore line view of machines diging for fossil fuels on the coast
Climate

6 Ways Climate Change Affects the Economy – Global Warming Economics

Climate change is directly affecting economies across the globe. Whether it be through major natural disasters, trade, or even overseas operations. It’s going to affect global economies one way or another.

What is Global Warming

HD earth from space

Global warming, in short, is the long-term rise of the earth’s average surface temperature. The earth has been going through periods of warming and cooling for hundreds of thousands of years. This is why Canada was under a kilometre of ice up until 10,000 years ago. The term global warming is mainly used to talk about the impact humans have had on the earth’s climate. Although some people may argue that global warming is not real, the vast majority of scientists believe that human influence has been the dominant cause of warming since the mid 20th century. We have an article here if you’d like to read more on global warming and the science behind it.

Property Damage From Hurricanes

As the climate changes natural disasters are becoming more frequent, and more intense. Hurricanes are getting stronger and so is the price we pay each year to fix the damage they cause. In short, as the surface temperature of the ocean rises this allows hurricanes to become more intense since they strengthen over warmer waters. If you’re interested, we have a comprehensive article here where we break down each natural disaster and how climate change impacts it.

Picture from space of massive hurricane on earth
Picture from space of hurricane

In 2017, hurricane Harvey made landfall leading a path of destruction in its path. This hurricane alone is estimated to have a cost of 125 billion. If we continue to see the surface temperature increase, we can also expect to see the price of these storms increase as well.

 Droughts and floods

In the United States, there is roughly 350,000,000 tons of corn produced each year. If there were to be significant floods or droughts across the country, the economy would take a hit. The agriculture industry across the world is massive, people need to eat. If land that has been used to grow crops for hundreds of years becomes a “dead zone” global economies will suffer.

As the planet warms, the ice at the north and south poles are melting. This is causing a rise and sea level which will effect locations that are below or at sea level currently. The sea level is rising slowly though, so this is not the greatest danger to most people living inland.

chart of the global average sea level rise
chart of the global average sea level rise from 1880-2016

As temperatures rise, there is more moisture in the air which leads to a warmer atmosphere that can hold more water. This means that when it does rain, there is potential for heavy downpour leading to flash flooding. This could affect property, crops, and pretty much every sector of the economy in one way or another.

chart of global temperature anomalies from 1880 to 2020
chart of global temperature anomalies from 1880 to 2020

This is going to make the supply of food go down, and when the supply goes down prices go up. It’s much more expensive to import food from other countries then it is to grow on home soil.

Wildfires

Munich Re, the world’s largest reinsurance firm, blamed climate change for $24 billion of losses in the California wildfires. It warned that insurance firms will have to raise premiums to cover rising costs from extreme weather. Although, not all wildfires can be attributed to climate change, although some definitely can.

Building with van in front of it on fire. Completely up in flames
California 2017

Immigration and security

In the future, we might see mass migration around the planet. If hurricanes continue to get worse, farm land’s become “dead zones”, and coastlines flood enough to make them uninhabitable, people are going to have to move. according to the United Nations High Commissioner for Refugees, extreme weather has displaced 22.5 million people.  Some scientists even predict that by 2050 that number could reach 700-800 million people.

Mass movements of people and social disruption may lead to civil unrest, and might even cause military intervention and other unintended consequences. This is going to cost governments a lot of money.

Taxes dedicated to global warming

Crowd at climate change protest. there is no planet b sign being help up by protestor
Climate Change Protest – 2017

As we’re seeing now, climate protests are going on around the world. What are these protests calling for? They want their governments to take action against climate change. This is a step in the right direction, but taking action means spending money… a lot of money.

Right now in Europe, there is a paper being proposed. It was signed by France, Belgium, Denmark, Luxemburg, Netherlands, Portugal, Spain, and Sweden. The paper proposes to spend 25% of the EU budget on climate change. This is just one of many proposed global bills to point funds toward climate change. There is a clear demand from people at the moment, they want money spent on climate change.

There is just one problem. You’ll have a hard time finding a government willing to cut spending in other sectors to move funds toward climate change. This money needs to come from somewhere, and that somewhere is increased taxes. We’re already seeing this in Canada with the “carbon tax.” Money does not grow on tree’s and printing more is only going to decrease the value of a dollar.

Animals becoming extinct or endangered

Currently, there is a large list of animals either endangered or facing extinction. The figures are much higher than previously thought, making up 47 percent of land mammals and 23 percent of the birds on the International Union for Conservation of Nature’s Red List of species threatened with extinction.

coral reef bleaching caused by global warming and climate change
coral reef bleaching caused by global warming

Money will need to be dedicated to conservation. Every animal is a piece of the puzzle. If one species goes extinct, other animals could as well. Think of the ecosystem as a house of cards. You can pull a few out but at some point, the whole thing collapses on itself.

Can Climate Change Affect the Economy?

Climate change will definitely effect the economy. Whether it’s through droughts, floods, or any natural disaster caused by climate change. These events are going to have an expensive price tag.

 Action needs to be taken on climate change but even this is going to cost billions of dollars. We are in a climate crisis and whatever way you look at it there is a lot of money involved. Global economies are going to feel the heat.

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