Global Warming: Its effects on the Economy by Vincent Colletti Professor Shakely English Composition II July 1, 2008 Outline THESIS: From the findings of experts on Global Warming and Climatology, it can be concluded that Global Warming has a direct effect on our current global economy and the instability of the future. Introduction I. Background A. The study of Environmental Economics B. Economic issues and relations to past and future global warming estimates II. The effects on GDP A. Increase of natural disasters B. Impact on agriculture C.
Rise in health care cost 1. Heat waves 2. Spread of disease D. Further subjugation those who have a lower standard of living 1. Displacement III. Opposing arguments A. Efforts to prevent global warming are to costly B. Low Winter mortality rate C. Possible Profit lies in the Arctic IV. What is being done to counteract climate change’s affects and plans for the future A. Kyoto Protocol 1. Acceptance/Refusal 2. Funds created B. “Green Collar” Jobs and Alternative Energy Sources 1. Wind/Water Power 2. Fuel efficient automobiles 3. Carbon Capture
Conclusion Global Warming: It’s affects on the economy In considering climate change policies, the fundamental trade-off principal that society faces is between, consumption today and consumption in the nearing future. It is a question of economics; the return on this environmental investment is lower damages and thus higher consumption in the future. Now is the time that nations must decide whether or not they will make investments in understanding the economics of the environment and act accordingly to slow the climate change over the coming centuries.
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According to the National Bureau of Environmental Research (NBER) environmental economics is defined as “… studies of the economic effects of national or local environmental policies around the world, including effects on pollution, research and development, physical investment, labor supply, economic efficiency, and the distribution of real income. ” It is the desirable option to have policies that are economically efficient so that the environmental objectives can be achieved in a least cost approach, but then the question arises how long should we wait until an optimal climate-change policy is fabricated? pic] This chart explains the forecasted increase in Earth’s average surface temperature according to a series of climate change situations. It is, of course, impossible to predict with certainty what permanent economic effect global warming will have, but many economists and scientists agree the past and present effects can serve as a guide as to what can be expected. From the findings of experts on Global Warming and Climatology, it can be concluded that Global Warming has a direct effect on our current global economy and the instability of the future.
Although scientists generally agree on the probable rise in the average global temperature over the next century foretelling the change in a specific region is more complex. Due to the fact that the forecast models used in determining global warming’s affects are just that, models, they cannot be taken as fact and are subject to change. According to the Stern Review, a report created by the former Chief Economist of the World Bank Nicholas Stern, “the cost of climate change could be equivalent to a permanent loss of around 0-3% in global world output” (Stern ix).
This would take humans into unknown territory which is the essential factor in the Stern Review which develops the basis that climate change will affect everyone, not just those whose greenhouse gas emissions are elevated. The report conveys the costs of extreme weather conditions could decrease the “…world Gross Domestic Product (GDP) by . 5-1% per annum... ” (Stern viii) before the middle of the century. In regards to the models Stern used in his report, the USA could expect a double of annual natural disaster costs due to the increase in hurricane wind speed attributable to the rise of sea temperature.
This should serve as Americas warning considering one of the most costly hurricanes, Hurricane Katrina, hit our shores in 2005. As Al Gore, former Vice President and long time Environmentalist, points out in his book An Inconvenient Truth, “Hurricane Katrina caused approximately $60 billion in insured losses” (Gore 102). A further impact on the world economy would concentrate in the UK who will be heavily affected by the melting of glaciers, whose “annual flood losses alone could increase from 0. % of GDP today to 0. 2-0. 4% of GDP once the increase in global average temperatures reaches 3 or 4 degrees Celsius” (Stern viii). Along with the devastation that will follow the increase in natural disasters, global warming will soon prove to be a burden on our agricultural market as well. According to the Environmental Protection Agency (EPA), the “changing climate could cause soils to become drier and drier, and crop failures could become more widespread. ” What burdens will this place on the global economy?
It will affect the poorest countries first, mostly due to the fact that the majority of these “poor” countries have a high dependency on agriculture as a means of living and trade. Another affect on our agriculture will be the disruption in our food supply according to author and Boston Globe editor Ross Gelbp, “global warming could result in insect related crop damage. ” With the information presented pertaining to the rising level in carbon dioxide it should be inferred that although plant growth accelerates in areas with elevated carbon dioxide concentration and to some would seem like an opportunity to initiate in mass harvesting and ncrease yields but it should be considered that many scientist along with Gelbp predict, “these initial increases will soon flatten, and a long-term diet of concentrated carbon dioxide will weaken plants,” (Gelbp 37) resulting in a less full-bodied, nutritious product. The fall in farm industry will ultimately pilot the increase of illness, death, and poverty, especially in third world countries. As briefly mentioned before, global warming will not only have an affect on our economy but also our health care system.
Naturally the rise of global temperature can be dangerous for humans because of the extreme weather conditions that are bodies are not accustomed to. A study by the EPA shows that an increase in “…the concentration of ozone at ground level due to higher air temperatures…” may lead to severe complications “for people with asthma and other lung related diseases. ” Logically higher air temperatures could seriously impact those who live in southern areas of the world.
The EPA estimates that in Atlanta, for example, even a warming of about two degrees(F) would increase heat-related deaths from currently 78 people annually to anywhere from 96 to 247 people per year, which if translated into a global scene it would be a travesty. The Stern Review points out a shocking yet “scared straight” statistic for some, it expressed that the heat wave in Europe of 2003 killed 35,000 people and is estimates show that if temperatures increase 2 or 3 degrees(C) this number can come close to doubling.
Also the EPA has speculated that global warming will promote insect life in farther northern areas that were once unable to facilitate growth. In terms of providing medicine for the various diseases carried by the insects such as Malaria, Dengue fever, Nile virus, and Yellow fever, it worries me if government or medical help will be able to offer aid to enough people considering it’s hard enough to get an adequate amount of Flu vaccinations in a single season; imagine an extension of warm seasons with infected insects spreading and establishing themselves in “unknown territories,” this could be the next modern epidemic.
In the Heat Is On, a striking fact the author uses to convey a similar point of that of above is “A side effect to global warming are insect attacks. A study shows that Alaskan forests have suffered from severe outbreaks of bark beetles, which have devastated several million acres of forest” (Gelbp 141). With an increase in severe weather conditions, spread of disease, decline inhabitable land, and sea levels raising many people will be forced to flee their homes. In a 60 Minutes special one of the worlds leading authorities on climate control, Bob Corell, told the world that “98 percent of the world’s mountain glaciers are melting. This is a startling fact considering the impact that will have on coastal cities around the world. Corell proceeded to explain that sea levels around the world will increase three feet within 100 years. Melting glaciers will inevitably increase flood risk and water supplies around the world. Thus approximately “one-sixth of the world’s population” (Stern vi) will be threatened with drinkable water shortages and displacement. Being unable to produce food or purchase necessities, it is estimated that “tens to hundreds of millions of people, with warming of 3 or 4 degrees(C) will have to relocate” (Stern vi).
Although it is often thought just those in Africa, Asia, and small islands will be affected it should be known that large cities such as New York, Tokyo, London, and Cairo all possess an equal risk. An estimate put forth by the Stern Report states that “…by the middle of the century, 200 million people may become permanently displaced…” all of which can be attributed to rising sea levels, strong floods, and soil and water salinization. Increases in extreme weather patterns “could reduce global gross domestic product by up to 1%... A two to three degrees Celsius, up to 10% of global output could be lost…” (Stern Review).
Nations worldwide must see the broader economic and security factors of global warming. “The melting Artic is the proverbial canary in the coalmine of planetary health and a harbinger of how the warming planet will profoundly affect U. S. national security” (Borgerson 9). With an economy in distress such as the United States, investing in energy efficiency should seem like the logical step forward in the nation’s history but lobbyists and those who oppose, with their isolationist instinct, look to seek a profit and mask the environment’s downward spiraling transformation.
It is time we “…get on with the important work of mitigation and adaptation by managing the consequences of the great melt” (Borgerson 9) however this proves to be harder than environmentalists expected. Opposition to “green energy” has currently caused much debate, with slandering advertisements from both extremes of the spectrum. One combatant idea stems from the “respected economic analysts GlobalInsight, their estimations, in 2002, concluded that meeting the Kyoto target would reduce Germany’s GDP by 5. 2%, Spains by 5. 0%, the U. K. ’s by 4. %, and the Netherlands by 3. 8%” (Horner 259). These speculated values stressed the idea that cleaning the environment was just not worth the lost incurred with following the protocol. Another suggestion opponents of environmental cleanup is “Spain and Britain would lose a million jobs, while Germany would lose nearly 2 million jobs, thanks in part to 40% increase in electricity and heating cost” (Horner 259), an proposal that has proved to be false, although they have seen a loss in GDP many analysts believe it is due to rising fuel costs.
Since the estimations of those who consider global warming too large of a problem to deal with, surfaced to be a fallacy, a new concept was pushed into the media, thus influencing the public in their favor. “Between 2004 and 2005, the Artic lost 14 percent of itsperennial ice—the dense, thick ice that is the main obstacle to shipping. In the last 23 years, 41 percent of this hard, multiyear ice has vanished. ” (Borgerson 2).
To many this may seem like a grim glance into the future, but for commercial industries and government this is an opportunity to exploit our land. The artic region located near Alaska would be a prime spot for accessing gas reserves. President Bush has proposed that a three way treaty between the United States, Russia, and Canada should be created and refineries put in place. It would seem as if “big business” is blind to what must occur in order for them to have their chance at producing fuel from the gas reserves.
This plan is supported by the fact that it will lessen the dependency on foreign oil. Climate change will have an un-proportionate positive to negative effect ration except for idealists in the market looking to turn a profit. The Stern Report addressed argument that global warming will have a constructive role in the future for instance; places such as Russia and Canada will be beneficiaries of a 2 or 3 degrees (C) in the sense that climate change will lessen winter’s harshness eventually leading to lower winter mortality, and heating costs.
It is also believed that the surge of warmer climates may also increase tourism to once barren artic tundra regions. An efficient response to global climate change will depend on the actions of an internationally collaborative effort. The United Nations Framework Convention on Climate Change (UNFCCC) has realized this and formatted a treaty entitled the Kyoto Protocol. This protocol sets forth for almost every industrialized nation, except the United States and Kazakhstan, a guideline as to how much greenhouse gas they may emit within a year.
It proposes that countries with higher emissions of greenhouse gases be held responsible and require them to pay for more energy efficient activities in less developed countries, thus managing not so much limiting, the amount of harmful gases released and funding countries in need of further energy efficient program development. According to the Union of Concerned Scientists, “over 50 nations representing 55 percent of industrialized nations’ emissions have agreed to ratify the protocol. ” To many economists this places the United States in the middle of the “war on global warming” and sees the U.
S. soon being forced to participate or face global environmental isolation. “Every country will need to adapt to climate change…” (Walker 163) although it will be much easier for some than others. Countries who barely produce enough GDP will find it harder to allocate funds to environmentally safe practices rather than an industrialized nation whose profits soar and money is easily set aside to research and development of “green” methods. “Already 3 global funds are aimed at aiding the least developed countries to adapt” (Walker 163).
As of April 2006, the Least Developed Country Fund has collected a sum of $89 million in actual funds. While the Special Climate Change Fund has received $45 million towards alternative manners of conduct and the estimated by the World Bank state the Clean Development Mechanism will have obtained close to $500 million by the year 2012 (Walker 163). It is ostensibly and economically understandable why so many countries fear the reduction of emissions the cost of mitigation, the loss of jobs, the public will become discontent with government.
However a transition to renewable energy would create millions of jobs globally and facilitate less fortunate nation’s raise of living standards without negatively compromising economic conditions of established countries. The transition from a high to a low greenhouse gas polluting economy will promote competitiveness and opportunity growth. For instance, Britain, within the next twelve years, has a targeted 20% increase in energy efficiency, 10% of vehicle traffic being powered by bio-fuels, and 15% of energy derived from renewable sources (Black).
Currently Sweden obtains about 5% of its electrical energy from water, this is called tidal power. Tidal power creates energy from the sea water that moves landwards, the current drives turbines which in effect generate energy. Another way to counteract global warming is the use of wind. Wind power is produced by use of wind mills, often clustered together on a wind farm, the force of the wind converts natural energy into a useful form such as electricity. Wind energy is easily harnessed, renewable, and is responsible for about 1% of world wide electricity use (Black). The importance of change is illustrated by the fact that world economic energy efficiency is presently improving at only half the rate of world economic growth” (U. S. Department of Energy). Another option to offset or maybe even neutralize the affects of global warming lies in the ideas set forth by an economic analyst Cliff May. May believes an “open standards” fuel law should be sanctioned that would require all new cars sold in the U. S. be Flexible Fuel Vehicles. Flexible fuel cars are automobiles that run not just on gasoline but a variety of alcohol and ethanol based fuels.
This would force consumers to buy these new cars that burn fuels cleaner than gasoline. One way of creating a demand for theses flex fuel cars would be to offer tax breaks as incentives for both the producer and consumer. An advantage that comes from alternative fuel such as ethanol is it is made from corn, sugar cane, sweet potatoes, and just about any starchy crop. Along with crops as possible “green” fuel sources, biomass for instance grass, crop residue, fallen leaves, weeds, and trash, all can serve a higher purpose and consequently are in abundance in the U. S. Before long, billions of dollars that we are now sending over seas could be going into the pockets of Americas—farmers, auto workers, alternative fuel producers and investors” (May 8A). Not only would alternative fuels create an economic stimulus, far greater than the checks sent out by President Bush, but it would help restore the environment. .
By adding to our consumption of an emerging market, alternative fueled automobiles, investing in companies that produce these fleets of vehicles, and taking away from government spending which follows the formula in calculating GDP, the U. S. ould be ranked number one. Additionally, a solution for increasing unemployment rates would finally be achieved. Also, being one the largest manufacturers of flexible fuel automobiles will enable international trade to increase significantly along with national income. There are limitless ideas as to what can rejuvenate the economy but few have hope of standing up to an idea this enveloping. It is worth keeping in mind that our past can serve as an example of how mankind reacted too late when faced with “threats like acid rain, deforestation, asbestos, CFCs, declining fisheries, BSE” (Black).
Simply, climate change will cause damage, in the sense that in what is done for our own benefit will cause harm to those in the future. Global warming can not be predicted with complete accuracy but enough can be inferred from the information and effects already available. “Mitigation- taking strong action to reduce emissions- must be viewed as an investment” (Stern i). Economists may see the fight against global warming as a cost incurred at this moment in order to avoid the repercussions of what the future may bring. And the less mitigation we do now, the greater complexity of ongoing adaptation will be.
The production and dispersing of low carbon or “green” technologies is critical in moving the world into a more sustainable condition. “There is no reason economic development and environmental stewardship cannot go hand in hand” (Borgerson 8).
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