Economists really ought to treat climate change as a priority
According to a poll this year, 48% of Americans are afraid of climate change. This may sound like a large percentage, but it is not nearly as high a figure as it should be. No other economic challenge we face today has ramifications that are as long-lasting as those of climate change. With the issue becoming increasingly urgent, this challenge must be brought to the forefront of economic policy. Here is why.
The most obvious economic impact of climate change is that of extreme weather. Not only does climate change alter weather patterns, it also causes a higher quantity and severity of extreme weather events. With oceans predicted to rise by 4 inches or more by 2100 due to melting ice caps, floods will undoubtedly worsen in frequency and size. This pales in comparison however to climate change’s potential exacerbation of already highly destructive hurricanes. In 2012 Hurricane Sandy brought a financial burden to the USA of $50 million – think about the developments a poor community could achieve with this amount of money! Homes, raw materials and power lines are a few examples of the vast quantity of economic capital destroyed when a hurricane strikes. The direct financial costs of hurricanes are compounded by the productivity and income lost from the disruption of normal life. This could include missed days of school for children, or transportation damage making it difficult for citizens to travel to work. We can no longer ignore the catastrophic impact climate change is having on these extreme weather events.
Hotter days may seem like a far less extreme effect of climate change, but they nevertheless have significant underlying impacts on GDP across the world. Hotter weather causes lower productivity as workers become exhausted far more easily, particularly those that work outdoors. Over time, the lost productivity will build up to have a prominent impact on output. The British Labour Party have recently stated that by 2050, UK GDP could suffer by £75 billion a year due to climate change and environmental damage. This shocking figure should prompt climate change to become a key political and economic issue. Hotter weather also has powerful impacts on the economic geography of the world. Popular crop-growing areas may become too wet or hot, while other areas that were previously too cold may become arable. Hiang, Burke and Miguel, in their recent publication in Nature, discovered that the predicted 23% fall in GDP due to climate change by the end of the century will have an extremely uneven impact. Colder, often already richer, countries will see an increase in agricultural output due to the changing temperature, while hotter, often poorer, countries will find it increasingly difficult. Inequality is already a prominent and highly debated issue, so this redistribution of economic growth will further increase the controversy and social conflict surrounding the issue.
Furthermore, an unexpected economic issue associated with climate change is weather-related migration. Families, workers and businesses may move from areas negatively impacted by climate change, such as most of Africa and South America, to more prosperous areas. In the immigrant-sceptic environment we are faced with today, this will undoubtedly worsen civil unrest and xenophobia. Similarly, we may see the emergence of more climate refugees due to the increased frequency of natural disasters and receding coastlines. This could result in a sudden mass movement of people across the world. Social disruption and increased racism are just two of the detrimental effects this could bring to communities.
It is clear that climate change should be a top economic concern. Not only does it have severe impacts on intangible goods such as human health and biodiversity, but it has catastrophic economic impacts, particularly on GDP and inequality. Therefore, it is undoubtedly one of the most important economic challenges we face today.