Economic Costs of Global Warming
Global warming or climate change can be identified as one of the most pressing issues of the contemporary times. With the passage of time, an increasing number of individuals are realizing the fact that global warming is not an issue to be ignored, particularly due to its economic effects. According to a variety of resources, which also include integrated assessment models, economics of global warming tend to combine several biophysical and socio-economic climate change assessments.
Advantages of Temperature Fluctuation
Temporary rise in temperature – According to some researchers, the global temperatures are always known to fluctuate. This makes the temperature to rise and fall temporarily and temperature fluctuation has its own advantages like in the following two cases:
- Improvement in agricultural output – It is more than often believed by many researchers that higher temperatures bring about vast improvement in terms of agricultural output. However, this statement often encounters a conflict when the issue of desertification is raised forth.
- Reducing electricity bills for chilly countries – It helps to generate lower electricity for countries that experience extremely cold temperature.
Problems or Disadvantages are More
- Increase in food prices – Global warming causes over agricultural production in some areas while in others it leads to desertification. Often, this is compounded by water shortage in those particular areas. This in turn, brings about a decrease in food supply due to increase in food prices. The countries that are net importers of food will be adversely affected by such a situation.
- Rise in sea levels – Global warming is also known to cause a rise in sea levels. This in turn, is followed by severe loss of land as well as its structural damage. Fighting against rising sea levels is also not easy as it’s an expensive process in terms of flood defenses. In some cases, even the best flood defenses have failed to thwart rising sea levels.
- Loss of wildlife – Fluctuation in temperature can also cause great mayhem for wildlife. The economic cost is often hard to be evaluated but often due to the rare species going extinct, the essential ingredients that are used to produce medicines for serious ailments become a big issue.
- Migration due to depopulation – Due to global warming the often the people of a particular region are observed to migrate from one country to the other; this results in overpopulation in one country and depopulation in the other.
- Damage due to storm – Global warming is also becoming a major factor, which witnesses an increasing propensity for storms and floods. This also results in huge insurance payouts. Take for instance, the year 2007 when the floods had created a much-avoided havoc in UK; all to be blamed on global warming. In such cases, it may happen that some areas may not be under insurance coverage and the ones that are insurable may be required to pay huge insurance premiums.
- Increasing infrastructural costs – Temperature variations may also lead to an increase in infrastructural costs. How? When the sewers, oil pipelines, water mains are exposed to extreme weather conditions, they are adversely affected giving way to sunken foundations, rigorously cracked runways and buckling roads.
Reducing the Effect
There are a number of factors, on which depends the global warming reduction or mitigation costs. Let’s have a glance through some of the most prominent ones:
- Action must be taken to lower the levels of atmospheric carbon-dioxide.
- Discount rate is also another crucial factor which plays a vital role in estimating the costs of mitigating global warming
- The relationship between regulatory incentives and technological development is the last and the most important factor. If the later can stimulate substantial technological development, this will reduce the cost of global warming
The economics of global warming or climate change are disseminated quite unequally. The sooner the regressive effects will be compensated within the environmental or other tax structure, the sooner the world will be benefit out of it.