The Economic Effects of Climate Change
Climate change is one of the most fiercely debated, politicized, and feared concerns of the 21st century. Ecological researchers at the Representative Concentration Pathway have predicted that global temperatures will rise a minimum of 5 degrees Fahrenheit by the year 2100 when compared to pre-industrial averages (“Climate Change Could Cost”). While the scale and long-term effects of significantly rising global temperatures are currently uncertain, signs of the short term impacts of climate change have been documented. With the U.S. pulling out of the Paris Climate Agreement on June 1st, 2017, one of the most prominent pieces of contemporary legislation to combat climate change, serious questions about how and if countries will address climate change are increasing . However, the global phenomenon affects much more than the natural world and, with or without effective legislation, will cripple global economics.
As temperatures rise and ice melts, companies and countries around the world are looking into commercializing the Arctic for economic benefits.In August 2018, international shipping conglomerate Maersk has begun testing shipping routes through the Arctic which has been made possible by melting ice and Russian nuclear powered icebreakers. These test routes have shown promise, shaving ten days off of the traditional route from East Asia to Northern Europe. While still not considered cost-efficient due to the volume of remaining arctic ice, scientists predict that such routes will be functional at a mass scale by 2030. These routes will undoubtedly reduce costs and expedite global shipping for major Asian and European corporations and will help further intertwine economies, contributing to the economic globalization trends. However, rising sea levels bring challenges to coastal communities already at danger today.
Climate change poses serious economic threats to many aspects of everyday life, especially for areas below sea level. For example, rising water levels projects to displace individuals in places like Florida, the Netherlands, Bangladesh, and Pacific Island Nations. In the case of the Netherlands, the country has been able to combat rising water level threats through dike building. Dating back to the eighth century, these projects consist of creating dam-like barriers to regulate sea levels and protect highly populated coastal cities and ports, specifically during storms and periods of unusually high tides. The modern dike-building initiative started in 1850 and has created high paying jobs for engineers, while providing employment for many construction workers. These undertakings also help to stimulate economic growth, allowing additional tax revenue to be spent on government programs such as welfare and universal health care.
In contrast, Bangladesh, a nation with severe statewide poverty and widespread political corruption, lacks both the funds and a stated specific plan to combat the issue. Being the 10th most densely populated nation in the world, with over one thousand people per square kilometer of land, experts conclude that a humanitarian catastrophe will occur by 2030 if sea levels continue to rise at their current rate. Aside from the terrible loss of life, nations such as the U.S. and other NATO countries will likely be faced with pressure to help finance a way to protect these individuals or face the economic costs of housing the largely uneducated, impoverished Bangledeshian asylum-seekers. Alternatively, the Pacific Island Nation Kiribati, has evaluated the economic costs of building dikes and other protective engineering methods to be too costly, and sought different routes to protect their populations. As a result, Kiribati recently purchased land in Fiji for nine million dollars in case of emergency relocation due to rising sea levels, As in many natural crises, the people living in underdeveloped countries are more likely to be severely affected by the phenomenon.
However, impoverished nations and coastal communities are not the only places projected to be affected by climate change. According to the New York Times, places that currently have mild seasonal temperatures will begin to have hotter and drier climates. As such, agriculture yields will suffer and the access to fresh drinking water will be diminished, causing prices for these necessary commodities to spike and leaving some individuals unable to afford them. In the U.S., it will become difficult for certain crops that have been a staple of the domestic economy, such as barley, corn, cotton, and rice to be grown at their current rates, leaving farmers no choice but to grow other, more expensive crops. It is projected that American agriculture costs will increase by 1.3 million annually until 2090 (“Climate Change Could Cost”). However, the labor and infrastructure sectors will undoubtedly suffer more. Worker inefficiently contributing to lost labor hours due to severe heat will increase by a projected $75 billion USD annually by 2090. Furthermore, an additional $38 billion annually in coastal property and road damage is projected to be incurred All in, climate change is projected to cost the U.S. a total of $10 trillion USD by 2090, roughly equal to 45% of its current outstanding debt. This significant added expense requires both current and future politicians and economists to completely rethink economic policy and might result in a shift to the national budget through increased taxes, less funding for education, military, and social programs such as welfare, affecting the after-tax incomes and everyday lives of all citizens. Furthermore, the U.S. will undoubtedly be faced with decisions to respond financially and socially to disasters in poor countries across the globe.
Climate change and its effects are real despite many politicians and individuals refusing to accept the science behind the issue. The longer it takes for world leaders to create legitimate legislation and take action on the issue, the worse the natural, social, and likely worst of all, burdening economic threats it projects to have across the globe will be. Nobody knows exactly what the effects will be, but climate change has the potential to alter the economic landscape of today’s world.
Works Cited
“Climate Change Could Cost U.S. Economy Hundreds of Billions a Year by 2090.” Yale Climate Connections, Yale University, 29 Apr. 2019, www.yaleclimateconnections.org/2019/04/climate-change-could-cost-u-s-economy-billions/.
Toll, Richard S J. “The Economic Impacts of Climate Change.” Oxford Academic, Oxford University Press, 12 Jan. 2018, academic.oup.com/reep/article/12/1/4/4804315#110883831.
