This September, it was reported that a United Nations panel had predicted that the world had 12 years to “check climate change or be prepared to face dire consequences”. This included limiting the rise in the Earth’s temperature to less than 1.5 degrees Celsius, with scientists from over 40 countries authoring the report. While environmental harm is the most pressing and widely acknowledged issue related to global warming, there is also the fact that it will likely cause a global economic collapse.
A recent report predicted that $34.4 trillion, would be the economic damage if global warming is not reversed. Not only does this go against Donald Trump’s claim that the Paris Climate Accord would “undermine our economy”, but keeping the temperature down would also increase the economies of 71 percent of the world’s countries. Not addressing the global warming will have the opposite effect and increase economic inequality across the globe. It was also noted that the report is an underestimate of the cost, as it does not include “tipping points” of no return such as the ice caps melting.
As with much of the news on the most dire environmental impacts of global warning, it all seems in the distance. However, the economic affects are already being felt. There have been increases in extreme weather that are costing countries billions in damage.
The Balance informs that hot weather in the US is causing corn and soya bean yields to plummet, increasing the prices of food. Mass migration has also been a direct result of climate change with 22.5 million displaced since 2008, and a total of 700 million predicted by 2050.
Economic instability also exacerbates existing social inequality. As huge industrial countries continue to churn out carbon into the air, developing countries that do not have the same industry capabilities will be the most effected. Developing countries, ill-equipped in disaster mitigation, will find themselves at risk of lower water supply, periodic droughts, food crisis, and other climate related events. But without the developing countries supplying raw materials and cheap labour, developed countries will also be affected, through knock-on effects to their economies.
These events, most of which an average citizen wouldn’t probably immediately feel, will dramatically affect the global economy. Food scarcity and higher mortality will translate into devastating losses in global markets and even more volatility for the world’s currencies — which according to FXCM’s guide on the Foreign Exchange, has a daily trading volume of $5 trillion and is the largest and most liquid market in the world. An economic collapse will spell disaster not just for the traders who work within this market, but also on entire countries whose stores of value will destabilise.
In order to combat this looming economic disaster experts are looking towards the rapid development of technology. Smart technology is being put forward as the saviour. Even if the technology is fully realised in time, the cost of converting the necessary urban and rural areas to bring global warming down will be huge.
Financial expert Larry Elliot also argues that governments are hypocritical over their promises, putting forward ideas for green growth and renewable energy while building more airports and roads. The policy of simulating growth to help develop greener directives is suppose to create a “balanced approach”, but is in fact extending the transition away from fossil fuels. Elliot puts forward that a new global institution needs to be created “with the power to levy a carbon tax globally”. If a joint global movement is not found soon, then the $34.4 trillion cost to the global economy will only be the beginning.