How Has Climate Change Changed the Way We Understand the Relationship Between Economic Growth and Development?
Global warming continues to impact the economies of countries in the world adversely. However, different nations face varying degrees of economic turmoil depending on the financial stability of the said state. Leading economists have been tracking the effects of global warming on world trade, but the resultant estimates vary due to skepticism concerning the anticipated effects of the natural catastrophe in the future. Research shows that increase in temperature will lower the global average GDP per capita by 23% in the year 2100 (Bhattacharya et al., 2016, 730). However, the situation on the ground may potentially be worse than stipulated because previous research relies on historical information which oversimplifies the information presented. Another fascinating feature of temperature rise is that it increases productivity in the colder regions while prolonging hot and devastating climate around the tropics. Climate change is one of the facets that help define the relationship between economic development and growth.
Developing Countries and the Effects of Climate Change
Developing countries form some of the high-risk areas where climate change portrays the most effects. Many of these countries are unprepared for the necessary adjustments and often end up relying on first world countries for economic grants and loans. Millner and Dietz (2015, 382) cite that poor choice in economic approach hinders efficient preparation and adaptation during instances of temperature increase. Many of the developing countries have traditional agricultural-based capital production methods. These methods are only resourceful during the rainy seasons as most of the farmers have not fully grasped the concept of genetic engineering and its application in agriculture. Alternatively, these countries could embrace adaptive methods of raising capital which is resilient during climate change periods. However, Millner and Dietz (2015, 382) argue that such adaptive methods are highly vulnerable under normal circumstances and are therefore only applicable during contingency periods.
The Perception of Countries Regarding Economic Growth and Development
Climate change has affected the perception of countries regarding the definition and processes that affect economic growth and development. According to Burke (2016, 252), the socio-economic value of climate change is determined through dissection of implications on the process of growth and development. The ongoing research hopes to further elaborate on these effects to contribute efforts made to remedy the situation. Most of the developing countries are high -risk areas due to their geographic location and economic rigidity. Most of these countries are in the tropics where temperatures are already high, and the further increase can bring about irreversible changes. Also, the economic setup of such nations lacks provisions for unexpected situations and this highlights on the challenges emerging countries face regarding incompetent leadership and poor planning. Millner and Dietz (2015, 383) cite that the climate change has prompted leaders in the society to rethink the strategy of economics and development in their respective countries.
The Role of Renewable Energy and Carbon Emission
Addressing the issue of global warming has led to the discovery of methods whose application can potentially maximize the productivity of the natural environment. Implementation of policies that promote the use of renewable sources of energy has resulted in better technology and constant supply of electricity to households (Bhattacharya et al., 2016, 734). Incentives offered by the various governments have promoted the industrial manufacture of renewable energy which continues to compete with conventional energy production. Adaption of the use of renewable energy in third world continents like Africa and South America has promoted the rapid expansion of energy manufacturing industry (Bhattacharya et al., 2016, 734). Economists have found a way of assessing the financial effects of carbon emission using SCC estimation module (Burke et al., 2016, 252). SCC allows countries to plan social welfare programs in response to the amount of carbon emitted annually. Furthermore, political leaders use SCC variables to promote the espousal of local regulations concerning climate change because the system highlights the need for a preemptive move to combat global warming effects.
Global Responsibility and the Effects on Economic Growth
CO2 emissions are prevalently more significant in developed countries as compared to developing countries. Global warming, therefore, highlights the need for universal participation in the formulation and implementation of climate policies (Stern, 3, 2006). According to the game theory, the proactive involvement of leaders in such activities promotes self-reflection which then enhances the focus on individual processes like the social and economic setup. Increased growth continues to infringe on the natural environment, and if the economics remain unchanged, populations may begin to suffer the consequences of climate change sooner rather than later. For instance, the greenhouse gas emission is one of the leading contributors to the overall CO2 levels observed in the atmosphere. Greenhouse gas emission may, therefore, promote extensive environmental degradation in the absence of regulatory processes (Stern, 2006, 6).
The Impact on Agriculture and Population Growth
Response to climate change in an agriculture-based economy depends on the biological and physical effects of climate change which trickle down to the social and economic setup (Parrya et al., 2004, 54). For instance, prolonged high temperatures may lead to reduced food production in the tropics which leads to loss of income obtained from exports and limited food resources for the population. However, climate change may also have advantageous effects regarding demographical distribution. Population increase is a multifaceted variable dependent on factors such as availability of constant food supply which in turn depends on agricultural output (Boserup, 2015, 5). Therefore, climate change promotes the respite of population growth rate. Slow population growth promotes economic stability and increases the GDP per capita under the prevailing conditions. However, fiscal steadiness may ultimately encourage population growth because people sustain a comfortable livelihood which helps reproduction. Therefore, climate change eventually causes recurring effects and the capriciousness of the economic facet further accelerates this phenomenon.
The Effects of Growth on the Natural Environment
Growth was previously associated with economic development under a positive spectrum. However, since the revelation of the effects of growth on the natural ecosystems, opinions regarding the role of the increase in economics have shifted. Growth encompasses all the different aspects of transnational progress which mainly stems from technological change. Many countries have experienced tremendous levels of economic development through the incorporation of technology into processes that raise revenue (Stern, 3, 2006). However, the integration process comes at a price as humans continue to neglect the effects of growth on the environment. For instance, increased infrastructure and expansion of the real estate sector has resulted in vast deforestation to provide land for human occupancy. Deforestation results in depletion of the ozone layer which protects the earth from the damaging effects of the sun. It also promotes an extended period of drought in some areas since forests are essential in the process of rain formation. Also, the harmful radiation from the sun translates to lifestyle illnesses like cancer. People fail to notice the effects of climate change because such occurrences accumulate over an extended period (Bhattacharya et al., 2016, 732). Therefore, most countries cannot combat global warming when the results amount to a threshold level that threatens the sustainability of the economy.
Water Levels, Shorelines, and Demographical Distribution
Temperature change shifts the water levels in the environment including sea levels and icebergs in cold regions. Increase in temperature promotes the melting of icecaps and increases the sea levels which may result in natural catastrophes such as flooding and tsunamis. However, economists have discovered ways in which countries can harness the energy from water sources to create renewable energy (Burke et al., 2016, 256). Renewable energy is advantageous as compared to conventional power because it guarantees the protection of the environment and at the same time provides electricity for the country. Countries have therefore increased the efforts of constructing dams which harness the energy in the water to produce hydroelectric power. Consequently, this power provides electricity for homes and businesses thus enabling the progression of economic activities. There is a direct link between energy consumption and economic growth (Bhattacharya et al., 2016, 734) and therefore efforts to conserve energy will negatively impact the financial processes. Renewable energy provides an alternative solution which not only caters to the economic aspect but also looks out for the environment.
Assessing the Economic Impact of Climate Change
Another effect of increased water levels changes in shorelines which affects demographical distribution which in turn impacts on the economic organization. As the water levels rise, most of the people living along the coastlines will have to migrate or invest in systems for water management (Boserup, 2015, 7). In some countries, migration translates to the expansion of the real estate sector which would increase the flow of revenue. However, for other nations, emigration translates to the loss of human capital and investment. Countries in colder regions will benefit from the increased pool of human labor for their industries and demand for new technology. Other sectors such as transportation also stand to benefit from migration (Stern, 4, 2006). Global warming fundamentally affects the economy of the world and will eventually make some places uninhabitable while others will be highly desirable.
Economic Development and Mitigation Programs
Analysis of climate change from an economic perspective allows for the inclusion of financial and social aspects into the mitigation programs designed to counter the effects of climate change. Such policies also can affect the economic structure leading to attainment of country goals regarding growth (Millner and Dietz, 2015, 382). Implementing economic variables in the literature available concerning climate change will provide more ideas on how to tackle climate change without shifting the economic outlook of the globe. The inclusion of monetary factors can also emphasize on the need to promote international relations and equality in resource allocation (Millner and Dietz, 2015, 386). Most of the existing methods of evaluation derive their conclusions from historical records about weather changes. However, modern methods of climate change evaluation should capture the external factors that cause climate change and the resultant effect.
The Role of Growth and Financial Adaptability
Climate change helps economists and policy-makers to understand the importance of economic development in ensuring adaptation capacity. Adaptation capacity is the ability and level of response of countries to unexpected situations (Parrya et al., 2004, 57) such as climate change which necessitates the mobilization of stored resources for the continued sustenance of the human population. Countries with stable economics and stringent policies regarding environmental degradation are less likely to suffer adverse effects of climate change. However, states whose economies are weak because of lax technological expansion and poor policy planning are more vulnerable to climate change effects. Therefore, climate change is fundamental in appreciating the role of growth in economic development and financial adaptability during periods of crisis. Socioeconomic vulnerability enhances the spread of poverty resulting from trickling effects of climate change (Parrya et al., 2004, 57). Countries must, therefore, secure their economic status by embracing the aspect of growth regarding technology and human capacity. Climate change has sensitized global leaders on the importance of financial stability in the event of occurrence of a catastrophe which would demand the implementation of adaptation measures to remedy the situation.
Climate Change and International Relations
Self-assessment is a vital process for all countries because it helps in troubleshooting and problem-solving. Global warming has over the recent past enhanced the sensitivity of leaders towards their country's situation. Assessment of risks associated with climate change reveals that global warming could result in conflict amongst different nations arising from differences in economic functions (Burke et al., 2016, 255). For instance, developing countries-which have an agriculture-based financial system may blame the developed countries which have a mixed economic system based on technology, manufacture, and agriculture- for the increased effects of global warming. Also, since developing countries suffer the most, climate change increases the dependency on developed countries. As a result, the more impoverished country continues to drown in debt which also hinders their economic growth and development.
The Geographical Aspect of Climate Change and Economic Activities
Climate change also enhances the appreciation of the geographical aspect of the economics of the country. Global warming affects the topography in which economic activities occur, and this dramatically affects the process of conducting business activities. A shift in growth zones is bound to affect farming as the changes in temperature shift the location of fauna (Boserup, 2015, 7). Some of the plants become extinct because of loss of habitat while others may shift to the colder area. In turn, the agricultural distribution changes and the country loses its source of income. However, the shift in growth zones may be advantageous to nations in colder regions which stand to benefit from the migration of fauna. Agricultural changes may result in the change from importing activities to exports to countries in lower areas. Therefore, such nations undergo economic expansion while countries in the tropics scramble to find new and sustainable methods of generating revenues. Also, changes in the growth zone affect the distribution of wildlife, and in some cases these animals become extinct (Boserup, 2015, 7). In the affected countries, the tourism levels will diminish which also eradicates the option of tourism as an alternative source of revenue.
Sustainability and Growth
Striking a balance between sustainability and growth requires the consideration of several factors. For example, leaders in developing countries fail to emphasize the need to conserve the environment. Removing political barriers and election of policymakers with the correct mindset concerning the situation is the first step in establishing equilibrium between humans and the natural environment (Parrya et al., 2004, 59). Also, countries need to conform to conditions that entice investors who will provide the required financial backing in the process of regulation of gas emission (Bhattacharya et al., 2016, 740).
The Role of Professionals in Understanding Growth
Modern understanding of economic development is based on the cumulative factors that determine various business activities. Professionals are essential during this process as they formulate hypotheses and rationales that are useful in countering effects of climate change on the dynamic international business scene (Bhattacharya et al., 2016, 740). Results from research efforts are useful in policy formulation as they provide insight to leaders on how the resultant regulations will affect future development efforts. Hence climatic changes play a role in defining the state of economic development which redefines the perspective held by professionals concerning growth.
References
Bhattacharya, M., Paramati, S., Ozturk. I., Bhattacharya, S. (2016). ‘The Effect of Renewable Energy Consumption On Economic Growth: Evidence from Top 38 Countries.’ Applied Energy, Vol 162 pp 733–741. Elsevier. http://dx.doi.org/10.1016/j.apenergy.2015.10.104
Burke, M., Craxton, M., Kolstad, C. (2016). ‘Opportunities for Advances in Climate Change Economics.’ Science pp 252-292, Iowa State University Digital Repository. doi: 10.1126/science aad9634
Boserup, E. (2015). ‘The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure.’ George Allen " Unwin Ltd.
Millner, A and Dietz, S. (2015). ‘Adaptation to Climate Change and Economic Growth in Developing Countries.’ Environment and Development Economics, 20 (3). pp. 380-406. ISSN 1355-770XDOI: 10.1017/S1355770X14000692
Parrya, M., Rosenzweigb, M., Iglesiasc, A., Livermored, M., Fische, G. (2014). ‘Effects Of Climate Change On Global Food Production Under SRES Emissions And Socio-Economic Scenarios.’ Global Environmental Change Vol 14, pp 53–67. Elsevier. doi: 10.1016/j.gloenvcha.2003.10.008.
Stern, N. (2006). ‘What is the Economics of Climate Change?’ World Economics Vol. 7, No. 2.
