La Salle College  Higher School of Economics

Course - economics

Essay

“Global warming and markets: how climate change

affects the economy

?”

Written by Rosa Perna

MDI-191

07.17.15

How climate change affects the economy?

“The time is past when humankind

thought it could selfishly draw on

exhaustible resources. We know now

the world is not a commodity.”

Leo Ine

Climate change has always happened on Earth but since the Industrial

Revolution, human activity has been affecting the atmosphere, which has led to an  increase in temperature and caused global warming. These days such problem as  global warming is considered to be the most serious outcome of climate change. It  is rapidly developing, affecting many areas of human activity. One of the areas  affected is the economy, and I will try to look into this problem and state the most  important facts.

The first and most obvious fact is that the overall temperature is getting

hotter. The statistic shows that the global annual temperature has increased at an  average rate of 0.07°C per decade since 1880 and over twice that rate (+0.18°C)  since 1981. This has its consequences. Some niches of the economy are slowly  shutting down, but the others, on the contrary, are gaining rise. This is happening  because some products are not relevant and needed anymore. To provide an  illustration, not a long time ago, 10-20 years back, it was very popular in my  country (which is Russia) to wear winter fur coats. But it’s noticeable that even the  famous harsh Russian winters are now not that harsh. With every new year, we see  warmer winters which are almost like European. Therefore, the manufacturers that  make fur coats lose money because their products are no longer in demand. On the  other hand, the summers are getting hotter too. People need to somehow cool down  their flats or houses and the request for air conditioners and cooling systems has  risen in the past years.

Not only does our society know about the climate change problem, but it also

is looking for a solution to it. Some actions have already been taken and some are  just about to be so. Climate change has proved the weakness of the modern economic  model. For more than 60 years the economy of consumption was thought to be the  most effective and dominant model, however, its time has to end very soon in order  to slow down global warming. Here’s why: first of all, the more natural resources  people consume, the more damage it brings to our planet because of the greenhouse  gases’ emission. This means that even if the countries are going to get richer, the  atmosphere is going to suffer and worsen. Secondly, such economic model is not  able to solve the global warming problem, consequently, there is no point of using  it as it is incompetent. For example, we cannot burn that much of gas, coal and oil  anymore. Because if we do this, we will not solve the global warming problem.  Therefore, the owners of these fields are going to lose money as the fossils are not  going to be mined. According to the statistic, those changes would cost about 2  trillion dollars. But there is an alternative for all of the fossil fuels. Many companies

have already started using alternative sources of energy such as solar batteries, wind  farms, wave power plants, etc. These energy sources do no harm to the atmosphere  and help slow down climate change and global warming.

The last thing I want to mention is the carbon fee. It is also called “climate

income”. This idea has been supported by many scientists across the world. This is  how it works: a tax will be imposed on fossil fuel companies and the revenue will  be handed out to people. It is considered to be a very powerful way to stimulate clean  alternatives. Also, handing out the revenue as an extra monthly income would make  a real difference to most people. The idea has already been adopted by Canada and  Switzerland. These two countries have made it work efficiently, so now the activists  are calling on the other countries to do the same.

All in all, it is hard to state whether the effect of climate change on the

economy is positive or negative. On one hand, it “kills” some niches of the economy  and makes people lose money. But on the other hand, the climate change problem  forces people to invent something new and move on with it. It creates a platform for  progress and a better future. Even though there are might be some difficulties now,  I tend to think that the impact of climate change on the economy is rather positive.  Sooner or later, people would learn how to earn money without terrorizing the  natural resources so that we can keep our planet clean and safe.

Sources:

• https://engineering.stanford.edu/magazine/article/economic-damage-

climate-change-may-be-more-you-think

• https://www.usgs.gov/faqs/why-climate-change-happening-and-what-are-

causes-1?qt-news_science_products=0#qt-news_science_products

• https://climate.nasa.gov/resources/global-warming-vs-climate-change/  • https://www.climate.gov/news-features/understanding-climate/climate-

change-global-temperature

• https://interaffairs.ru/news/show/25416  • https://www.climatehotmap.org/global-warming-effects/economy.html  • https://climateincome.org  • https://www.nytimes.com/2019/01/17/upshot/how-to-think-about-the-costs-

of-climate-change.html

