Impact of Climate Change on the Global Economy Research Paper

1.Introduction

            Climate change is an acute global issue that requires paying due attention on its impacts on the global economy. Everybody knows that global economy is a system that involved human activities of all nations due to the growth of globalization. There is much evidence that global warming has negative impact on the global economy because of the dependence of nations on the natural resources. Natural resources management plays an important role in the development of global economies. Rising temperatures in different parts of the world lead to weakening of economically valuable species, as well as other natural resources. Scientists and economists have already studied the economic and environmental consequences of the impact of global climate change. Obviously, there is a need for reducing global carbon emissions in order to address global economic challenges faced by nations across the world.  Valid scientific evidence shows that “human activity is causing global warming, with the main sources of greenhouse gases, in order of global importance, being electricity generation, land-use changes (particularly deforestation), agriculture and transport” (Stern 1). Actually, scientists and economists from all over the world assume that human activity is the primary cause of global warming, which leads to environmental changes like snow and ice melting,  rising sea levels, and changes in weather conductions. For example, extreme heat, drought and heavy downpours affect different sectors of the global economy. The analysis of academic sources on the impact of climate change on the global economy shows that the future of humanity is dependent largely on the strategies that are targeted at reduction of global emissions. Undoubtedly, the global economic activity should be reassessed and reviewed to identify what improvements should be made to minimize the negative consequences of these impacts. There is a need for adaptation to climate change both at local and global levels due to improved global cooperation and coordination.

2.Analysis of the impact of climate change on the global economy

            The analysis of the impact of climate change on global economy is based on the study of specific affected areas that play an important role in the development of human society. It has been found that climate change related events have negative economic impact because of the considerable damage to property and infrastructure systems,  loss of productivity, increased level of mass migration and associated security threats, and, finally, increased inflation rate.

            2.1.Considerable damage to property and infrastructure systems

            Currently, one of the significant impacts of climate change is considerable damage to property and infrastructure caused by          continuous environmental events like sea-level rise, floods, droughts, wildfires, and extreme storms. Undoubtedly, the damaged property should be repaired. There is a need for repairing homes, office buildings, roads, bridges, rail-road tracks, airport runways, power lines, dams, levees, and seawalls. In urban and rural areas, the disruptions caused by climate change events in one infrastructure system lead to considerable disruptions in other systems. This fact means that the lack of adaptability to high temperatures and other effects of climate change has negative economic impacts on the development of human society (Global Change).

            In addition, large cities can be viewed as the primary responders to the impact of climate change-related events. These events create many challenges because the population of urban areas is constantly growing. Besides, large cities have well-developed infrastructures that incorporate many resources to provide effective work of the infrastructure systems (Global Change). The economic value of the improper work of the infrastructure systems should be assessed by local governments to find the proper solutions to this problem.  

            2.2.Loss of productivity

            As a rule, any disruptions and failures that occur in human life caused by unexpected climate change events lead to loss of employment, manufacturing, educational opportunities, trade, functioning of the transportation system, agricultural practices, energy production, and tourism development. These facts mean that each area of human activity is affected by climate change events in its own way. According to researchers, “climate change can therefore be expected to impact on agriculture, potentially threatening established aspects of farming systems but also providing opportunities for improvements” (Gornall et al. 1). For example, such agricultural practices as planting and harvesting can be affected by severe rainfalls, snowstorms or drought. Researchers found that the expected sea-level rise can lead to the loss of large agricultural areas, while the predictable impacts of flooding and storm surges can lead to much more losses of lands appropriate for agricultural practices (Gornall et al. 1). It is difficult to ensure effective functioning of energy power system when the infrastructure is damaged. As a result, people face a number of economic problems caused by climate change events: electric power outages, water inundation, increased snarl traffic, air travel delays, etc. Besides, productivity is affected by various health risks caused by climate change events. For example, high temperatures affect the construction industry, while air pollution leads to allergic reactions, asthma and other conditions which prevent people from performing their job duties. According to recent studies, “climate change is expected to strongly affect tree species distribution within forests” (Hanewinkel et al. 203). Economic value of land use should be considered while finding solutions to current climate-related problems. Researchers expect that “the expected value of European forest land will decrease owing to the decline of economically valuable species in the absence of effective countermeasures” ( Hanewinkel et al. 203). Taking into consideration the above mentioned impacts of climate change, it is possible to conclude that low level of labour productivity is connected with low level of capital stock. There is much evidence that high temperatures have negative impact on food security and lead to the spread of infectious diseases. Those people who are employed to perform their job duties outdoors will be affected by these unavoidable effects of global warming. It is clear that productivity will be reduced significantly, causing social unrest.

            2.3.Increased level of mass migration and associated security threats

            The growth of climate leads to changes in displacement of population. Many people have to leave their native cities because they cannot live in the areas affected by drought, floods, wildfires, cyclones and other climate change events which can be assessed as environmental disasters. As a result, mass movement of refugees leads to social disruption, civil unrest, and political and military conflicts. According to researchers, “In climate change discourse, climate mobility is often characterised as the production of ‘refugees’, with a tendency to discount long histories of ordinary mobility among affected populations” (Farbotko & Lazrus 382). For example, the most vulnerable climate-exposed population is the population of Tuvalu in the Pacific. Researchers assume that “Tuvaluans are being used as the immediate evidence of displacement that the climate change crisis narrative seems to require” (Farbotko & Lazrus 382). Currently, climate change vulnerable populations are assessed as victims and require assistance of other nations.

            2.4.Increased level of inflation

            There is much evidence that the loss of productivity, infrastructure damages and other factors may lead to the increased inflation rate because of the emergence of shortages in various industries. The result of the continuous occurrence of climate change events is output reduction and the relevant price growth. Undoubtedly, these changes in economic development will lead to considerable inflationary effects on the global economy. The most vulnerable industry is the agricultural industry because of its sensitivity to changes in climate and continuous periods of extreme weather conditions. According to recent studies on the impact of climate change on the world economy, “higher global food prices will likely thus squeeze consumers’ income in the process” (Wade 1). It is necessary to understand that the impacts of environmental disasters are negative for some regions, while many other  regions will become more suitable for agricultural practices, such as crop production. Innovative technologies can help to  improve resistance of crops drought, but food price inflation swill be growing. According to recent study,  “rising inflation may also materialise through reduced land availability” (Wade 1). As the increased temperature leads to migration, some land will become uninhabitable. Assessing the impact of mass migration, it is necessary to recognize that inflation rate may be affected by this factor as well. Actually, people will have to live in the areas that are highly populated (Wade 1).

3.Strategies aimed at addressing climate change impact on global economy

            In order to address the negative impact of climate change events on global economy, there is a need for developing the proper coping strategies to help human society in its stable development and growth. According to researchers, “any effective response to the challenge of climate change must be based on an international understanding that its origins, impact, scale and urgency require action that is

global and collective” (Stern 9). It is crucial to make right and timely decisions in order to help the global economy in elimination of the negative impact of climate change disasters. This fact means that all nations should have a good understanding of the possible implications of climate change in order to strengthen  adaptation and  mitigation practices.

            To start with, the most important strategy is to reduce carbon emissions across the world.  All industries should follow this strategy to succeed in achievement of final results. For example, the agricultural industry should provide opportunities to farmers to complete irrigation of previously rain-fed lands, reduce temperature in cattle sheds of livestock farms, as well as to provide effective pest control. In fact, local governmental authorities should be able to deal with energy efficiency strategy that allows saving energy consumption (Stern 9).

            Besides, it is possible to develop the so-called early warning systems that will predict the periods of increased temperature regime and other environmental disasters. This strategy will allow provides adequate emergency response and avoid casualties. Furthermore, it is recommended to develop and implement a strategy that will be focused on coping with extreme climate change events through construction of specific facilities like seawalls, improvement of sewer overflows systems and strengthening bridges, rail-ways, subways, and other vital elements of the system of transportation (Global Change).
            It is necessary to recognize that preventive strategies are less costly than reconstruction of the damaged infrastructure and property after climate change events.  Currently, many government agencies, institutions and public organizations have developed effective adaptation plans that are focused on addressing the needs of people in terms of protecting infrastructure systems and public health. In order to achieve success in implementation of this strategy, these adaptation efforts should become widely spread due to collaborative activities which can help to overcome any barriers in coordination of these practices (Global Change).  Thus, “adaptation is an essential policy response, and the international community must find ways of supporting adaptation, especially in the most vulnerable countries” (Stern 6). These facts mean that people across the world should be aware of the need for policy development aimed at adaptation to climate change with the goal to make economic impacts weakened.

            All in all, taking into consideration the key findings from recent research studies on the economic effects of climate change, it is possible to predict that the climate problem is complicated and will continue its existence in the future. According to researchers, “politicians are proposing to spend hundreds of billions of dollars on greenhouse gas emission reduction, and at present, economists cannot say with confidence whether this investment is too much or too little” (Tol 46). Each nations should develop effective policies aimed at reduction of carbon emissions. As a result, many investments decisions should be altered. The price placed on carbon emission should be high to allow the spread of new technologies, including energy efficient resources that can become reliable and harmless alternatives. The global climate policy should be followed by all nations of the world, including the less vulnerable and the most vulnerable nations (Tol 46).

4.Conclusion

            Thus, it is necessary to conclude that climate change is an a serious global problem that should be resolved by joint actions of all governments. It is clear that even insignificant levels of climate change have a strong impact on the global economy. Effective adaptation to the changes in seasonal temperatures and various environmental events is one of the possible strategies, but the key common strategy is to reduce carbon emissions both at local and global levels. The analysis of the economic impacts of climate change is based on relevant historical data taken form all parts of the globe. Hence, all nations should work collaboratively to reduce carbon emissions, as well as implement other effective and reliable strategies to address the emergent problem, namely early warning systems and preventive strategies.

Works Cited

Farbotko, Carol & Lazrus, Heather. “The first climate refugees? Contesting global narratives of climate change in Tuvalu,” Global Environmental Change, 22. 2 (2012): 382–390.

Global Change. Report. 2014. Available from:<http://nca2014.globalchange.gov/report>

Gornall, Jemma; Betts, Richard; Burke, Eleanor et. al. “Implications of climate change for agricultural productivity in the early twenty-first century,” Philosophical Transactions of the Royal Society B, 365. 1554 (2010): 1-10.

Hanewinkel, Marc; Cullmann, Dominik A., Schelhaas, M., Nabuurs, Geart-Jan, Zimmermann, Niklaus E. “Climate change may cause severe loss in the economic value of European forest land,” Nature Climate Change 3 (2013): 203–207.

Stern, Nicholas. “What is the Economics of Climate Change” World Economics, 7. 2(2006): 1- 10.

Tol, Richard. “The Economic Effects of Climate Change,” Journal of Economic Perspectives, 29-51.

Wade, Keith. “The impact of climate change on the global economy,”Pieria. Web. Aug 3, 2015. Available from: <http://www.pieria.co.uk/articles/the_impact_of_climate_change_on_the_global_economy>

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 29, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 29, 2024]
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