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Financial Impact of Global Warming
As of today, global warming is one of the most pressing threats to our environment. With rising temperatures come threats to ocean levels, natural resources and the survival of various species, but issues in the environment are accompanied by a variety of other consequences. The environment is intertwined with the international economy; a fact that is often remains overlooked. The world's oceans, forests and the animals that inhabit these areas provide humans with the foundations for the various goods and products that are consumed and traded on a daily basis. In 2006, the British government released a 576-page document called the Stern Review Report on the Economics of Climate Change written by economics Nicholas Stern. The report attempted to highlight the delicate relationship between the environment and the world's economy. This document discusses the long list of economic burdens that have the potential to come with global warming and recommends that global warming should be economically targeted sooner, rather than later.
The issue of global warming has caused a great deal of economic debate. According to the Stern, the financial burdens caused by strategies to curb the effects of global warming today are far less than the alternative. By the year 2100, it is predicted that the Earth's temperature could rise by as much as 10 degrees. The damage that such a dramatic increase in temperature could cause is monumental. A rise in sea levels could cause major coastal cities to be submerged in water. Unmanaged global warming also has the potential to create land degradation, drought and desertification, which can lead to crop failures that would drastically affect agriculture. Stern's report predicted that the world's economic loss in 2050, as a result of global warming, could reach anywhere between 5%-20% of the world's yearly GDP. An economic hit such as this is nearly the equivalent of a worldwide depression. Stern's alternative, which involved an initiative to increase research and consumer education, along with the world wide implementation of carbon pricing, would only cost 1% of the world's yearly GDP. Though this is still $600 billion dollars annually, Stern stands behind the principle that the practice of prevention is far less expensive in the long run.
Although Stern's proposal may seem straightforward and just to the average listener, many experts disagreed. Many corporations and governments believe that making technological switches to more green technology is too great of a burden. The costs of these switches were believed to be underestimated in Stern's proposal. Likewise, many still resist the idea of placing financial penalties on greenhouse gas emission levels for companies. Others believe that the issue of global warming is not the most important issue in the world today, and therefore does not merit 1% of the world's GDP. These critics feel like money would be better spent on issues such as disease and starvation, which are both more urgent than global warming.
Though Stern's report did not spark the united international front that he hoped, five years after the report, several advancements in the fight against global warming have been made. Many countries have implemented a form of carbon pricing, either through setting carbon emission caps or by creating an open carbon emissions market. Dozens of companies worldwide are dedicated to improving green technology and continue to push to find more effective forms of alternative power. Hopefully these advancements will be enough to curb the vast financial burden that Stern predicts in coming decades.
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