Adapt or Perish in Climate Change: The Economic Cost of Carbon Emissions

 The Cost of Carbon: Fossil Fuels and their Legacy

The economic cost of carbon emissions has financial burdens on societies worldwide

The Economic Cost of Carbon Emissions

Being one of the most pressing issues of our time, the economic cost of carbon emissions reflects the direct and indirect financial burdens imposed on societies worldwide. Its major costs directly come from damages to infrastructure, disruptions to industries, public health expenses, and climate change inaction, among other factors.

This sub-topic explores the multi-faceted economic costly impacts of carbon emissions, focusing on climate-related disasters, product and productivity losses, and the uneven burden on developing and developed countries.

Direct Costs: Climate-Related Disasters and Infrastructure Damage ($275 billion globally)

The economic costs associated with GHG emissions are clearly illustrated through various events created by hurricanes, floods, droughts, and wildfires, among other climate-related disasters. These environmental events are increasing in frequency and intensity, resulting from rising global temperatures aggravated by greenhouse gas emissions.

One of the primary impacts of extreme weather is the destruction of infrastructure, including roads, bridges, buildings, and utilities. For example, Hurricane Harvey in 2017 caused approximately $125 billion in damages, making it one of the most expensive hurricanes in US history (National Oceanic and Atmospheric Administration [NOAA], 2023). Additionally, rising sea levels pose significant financial risks to coastal cities such as Miami, Jakarta, and Venice, which are vulnerable to flooding and erosion.

In 2022 alone, climate-related disasters resulted in global economic losses totaling $275 billion, with uninsured losses accounting for a significant portion of this figure, particularly in developing nations that often lack robust insurance markets (Swiss Re Institute, 2022). The rising severe and frequent anthropogenic disasters also pressure the insurance industry, making insurers face higher claims. This situation makes premiums more expensive and only offers limited coverage for high-risk areas. It leaves communities in a more risky environment as they become more exposed and vulnerable to future climate-related catastrophes.

Indirect Costs: Productivity Losses and Economic Disruptions (80 million jobs)

Carbon emissions adversely affect all forms of productivity and economic stability across industries in all countries.

The shifting temperature and precipitation patterns can disrupt production in the agricultural sector, leading to lower yields and higher food prices. For example, Sub-Saharan Africa experienced prolonged droughts in the past few years, resulting in crop production failures, jeopardizing food security and livelihood in that region (World Bank, 2021). Another case is drought in the Midwest, the United States, in 2012, which cost $30 billion in agricultural product losses. These cases highlight and starkly teach us that ecosystems are very sensitive and vulnerable to any form of climate variability.

Rising temperatures and intense heat also risk labor productivity, affecting outdoor activities in the construction, agriculture, and transportation sectors. The International Labor Organization (ILO) estimated that the constantly rising heat could result in the loss of 80 million full-time jobs worldwide by 2030, equivalent to a 2.2% decrease in total working hours (ILO, 2019).

Furthermore, climate-related events can disrupt global supply chains, leading to delays and increasing business transaction costs. In 2011, devastating floods severely affected the electronics and automotive industries in Thailand, showing the negative impacts of climate change on modern economies and their interconnectedness.

Public Health Costs: A Hidden Economic Burden ($5 trillion globally)

The public health effects of carbon emissions result in substantial economic implications through direct healthcare costs and reduced productivity.

The combustion of fossil fuels releases harmful pollutants, such as fine particulate matter (PM2.5) and nitrogen oxides (NOₓ), which contribute to severe respiratory and cardiovascular diseases. The World Health Organization (WHO) estimates that air pollution causes about 7 million annual premature deaths and an economic burden of over $5 trillion in lost productivity and healthcare expenses globally (WHO, 2021).

Moreover, rising temperatures are associated with an increase in heat-related illnesses and fatalities, particularly among vulnerable populations. For instance, the 2003 European heatwave resulted in over 70,000 excess deaths, which imposed high costs on healthcare systems and affected productivity (Robine et al., 2008).

Additionally, climate change is expanding the habitat range of disease vectors, such as mosquitoes, resulting in higher rates of vector-borne diseases like malaria, dengue, and Lyme disease. Such maladies include economic burdens to healthcare costs, reduced workforce productivity, and long-term negative impacts on the community's well-being.

Unequal Economic Burdens: Developing vs. Developed Nations

The economic costs of carbon emissions are uneven worldwide. Despite their low contribution to global emissions, developing countries often bear the highest costs due to their geographic vulnerabilities, dependence on climate-sensitive sectors, and limited financial resources for adaptation.

Bangladesh, the Maldives, and all small island nations and low-lying countries and regions are too vulnerable and already facing the brunt of climate change's economic costs. These island nations suffer major challenges in relocating their inhabitants to safer grounds and securing materials for constructing extreme weather-resilient infrastructure. The adaptation strategies of such small island and developing states (SIDS) heavily burden their finances, often exceeding their gross domestic product (GDP).

Moreover, most developing countries with economies relying heavily on agriculture are highly susceptible to climate variability. In Sub-Saharan Africa, for instance, the impacts of climate change could reduce crop yields by up to 30% by 2050, aggravating poverty and food insecurity in this region's already existing arid issues (UNEP, 2022). This agricultural dependence creates a vicious cycle where climate impacts further deepen economic struggles.

With plans to address these challenges, almost all developed nations have agreed to provide $100 billion annually to climate finance to assist developing countries in their fight for survival. However, the commitment still has to be fulfilled, as many of these countries still need to provide financially, and the annual amount to assist developing countries has yet to be reached. The need for more financial support to become resilient against climate challenges entails economic disparities and the inability to be sustainable and survive against the impacts (UNFCCC, 2021).

The Cost of Inaction vs. Climate Investments

If we fail to address GHG emissions, major economic risks will lead to escalating costs surpassing the investments needed for climate action. The urgency of this issue cannot be overstated, as the economic repercussions of inaction are devastatingly far-reaching.

According to the Swiss Re Institute's research, if we do not take massive action to mitigate climate change, the global GDP could decrease by as much as 18% in 2050 (SRI, 2021). This alarming projection arises from various factors, including reduced labor productivity, damage to critical infrastructure, and escalating healthcare expenses. The cumulative impact of these losses badly demands proactive measures to safeguard our economic future.

Conversely, investing in renewables, enhancing energy efficiency, developing green spaces, and constructing more sustainable infrastructure would entail economic opportunities while adapting to climate change. According to research from the Global Commission on Adaptation (GCA, 2019), approximately US$4 can be earned as benefits for every dollar invested in climate adaptation. These benefits encompass decreased disaster-related costs and improved productivity, emphasizing the potential of climate action to generate positive economic outcomes.

Furthermore, transitioning to a low-carbon economy addresses environmental challenges and opens doors to job creation and sustainable economic growth. The renewable energy sector alone employed an impressive 12 million individuals worldwide in 2020, highlighting the sector's vitality. With the potential for significant expansion in the coming decades, as the International Renewable Energy Agency (IRENA, 2021) reported, the move toward a green economy provides both environmental and economic dividends. 

The report from the International Renewable Energy Agency (IRENA, 2021) indicated that moving toward a green economy provides both environmental and economic benefits, a potentially crucial and major expansion in the coming decades.

Adapt or Perish in Climate Change: The Evidence of a Changing Climate

 The Evidence and Impacts of a Changing Climate

Climate change impacts include extreme weather events

The evidence of a changing climate is apparent worldwide, as extreme weather events, rising sea levels, shifting precipitation patterns, and ecosystem disruptions. These occurrences are not isolated because they are interconnected symptoms of a broader climate crisis. This section explores these key indicators, offering detailed examples and the scientific foundation needed to understand their origins and implications.

Extreme Weather Events

Extreme weather events, including hurricanes, heatwaves, droughts, and floods, as direct impacts of climate change, are occurring with more rapid frequency and intensity. The rising temperatures in both the atmosphere and oceans play a significant role in increasing the severity and unpredictability of these events.

Heatwaves

Heatwaves are characterized as extended periods of extremely high temperatures. It is more frequent during dry and summer seasons and ranks as one of the most dangerous weather phenomena. Over the past century, their occurrence and severity have escalated dramatically, with record highs reported across Europe, North America, and Asia (World Meteorological Organization [WMO], 2022). One record-breaking event is the historic heatwave in the Pacific Northwest in 2021, raising the temperatures in Canada to 49.6°C (NOAA, 2022). These occurrences are closely associated with human-driven warming.

Hurricanes and Cyclones

Increased ocean temperatures provide additional energy for tropical cyclones, heightening their intensity and destructiveness. For example, Hurricane Harvey in 2017 released more than 60 inches of rain in parts of Texas, resulting in catastrophic flooding that incurred approximately $125 billion in damages (NASA, 2023). Additionally, the warmer ocean temperatures fuel storm intensity and increase the duration of cyclones, prolonging the threat to coastal communities. To mitigate and adapt to such challenging changes, it is vital to reduce the impacts, such as investing in resilient infrastructure and improving early warning systems.

Floods and Droughts

A couple of major impacts of climate change are floods and droughts. Climate change alters precipitation patterns, causing more intense rainfall in some areas while causing prolonged dry spells in others. According to the report, in 2022, Pakistan experienced unusual monsoon rains that inundated one-third of the nation and affected 33 million people (UNEP, 2022). On the other side of the globe, the regions in Sub-Saharan Africa are grappling with food shortages and displacement due to the ongoing droughts.

Rising Sea Levels

The rising sea levels are one of the most visible consequences of global warming. These phenomena are driven by two primary factors: the thermal expansion of seawater and the melting of ice from glaciers and ice sheets. 

These rising sea levels are a significant effect of global warming, caused mainly by the warming of ocean water and the melting of glaciers and polar ice. As the Earth's atmospheric temperature increases, ocean water expands, which accounts for about one-third of the observed rise in sea levels (IPCC, 2021).

At the same time, glaciers worldwide are shrinking, and large ice sheets in Greenland and Antarctica are losing considerable amounts of ice. Aside from other huge areas covered with ice, Greenland alone lost an average of 286 billion tons of ice annually from 1993 to 2021, making it a major contributor to global sea-level rise (NASA, 2023).

Rising sea levels threaten coastal cities, small island nations, and low-lying areas. Locations such as Miami, Venice, and Jakarta already witness more frequent flooding during high tides. In the Maldives, rising waters surrounding this island nation are alarming; if current trends continue, the islands will likely submerge by the end of the century (WMO, 2022).

Changes in Precipitation Patterns

Climate change is practically altering the normal global precipitation patterns. Such circumstances increase the rainfall cycles in already wetter regions and, unfortunately, worsen the dry seasons in already arid areas. These changing patterns pose challenges to farming communities, water management systems, traditional settlement areas, and disaster preparedness.

Heavier rainfall has become more common, as a warmer atmosphere can hold more moisture, resulting in more intense and frequent downpours. Such extreme weather can overwhelm existing infrastructure, trigger landslides, and increase the risk of flash flooding, particularly in urban areas. In contrast, arid and semi-arid regions are seeing reduced precipitation, which exacerbates drought conditions and threatens water availability for drinking, agriculture, and industry. For instance, the Horn of Africa is experiencing one of its most severe droughts in decades, putting over 20 million people at risk of extreme hunger (World Food Programme [WFP], 2022).

Moreover, these changes disrupt normal farming activities, seriously reducing the amount of produce and negatively affecting farmers' livelihood and economic circumstances. With these changing precipitation patterns, monsoon rains are increasingly erratic, decreasing crop yields and thus threatening food security for millions of people, including animals, in South Asia. For example, a study found that rice yields could decrease by as much as 10% for every 1°C rise in temperature, while erratic rainfall could further reduce yields by up to 25% in certain regions (Lobell et al., 2011). This dual impact seriously threatens food security in vulnerable areas such as South Asia.

1.3.4 Ecosystem Disruptions

The Earth's ecosystems are undergoing various forms of alterations. The ecosystems are negatively affecting biodiversity, ecosystem services, and human well-being. This disruption results in many species facing extinction, and vital living resources like clean air, water, and food security are increasingly threatened, jeopardizing the health of human populations worldwide.

Coral Reefs (70% bleaching)

Known as the "rainforests of the sea," coral reefs are highly vulnerable to temperature fluctuations. Rising ocean temperatures have led to widespread coral bleaching, a process in which corals expel the algae that provide them with color and essential nutrients. Notably, the Great Barrier Reef has experienced four mass bleaching events since 2016, posing a serious threat to the survival of one of the planet's most biodiverse ecosystems (Hoegh-Guldberg et al., 2018).

Recent estimates suggest that approximately 70% of the world's coral reefs have experienced bleaching over the past few decades, with significant occurrences linked to elevated sea temperatures. According to a study published by Hughes et al. (2017), about 30% of the world's coral reefs have been lost since the 1970s, and predictions indicate that without substantial intervention, an additional 30% could be lost within the next few decades.

Shifting Biomes

Climate change is prompting species to migrate to higher altitudes and latitudes in search of more suitable habitats. For instance, boreal forests advance northward into tundra regions, while tropical species encroach into temperate zones (Parmesan & Yohe, 2003). These ecological shifts disrupt existing balances and place additional stress on native species.

For example, studies have shown an upward shift in the distribution of various species, particularly in mountainous regions. Mountain plants have been observed shifting their range upward by several meters each decade. At the same time, bird species, such as the yellow-bellied Siskin, have shown similar patterns of movement towards higher elevations. According to a study by Lenoir et al. (2008), many plant species in the European Alps have moved upward by an average of 29 meters per decade.

Loss of Biodiversity (1 million species)

The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) reports that approximately one (1) million species are at risk of extinction due to climate change and human activities (IPBES, 2019). The decline of pollinators especially threatens food security by diminishing agricultural yields, especially in countries and regions already experiencing food shortages. In addition, habitat loss caused by humans through deforestation and urbanization significantly contributes to biodiversity loss, disrupting ecosystems and their services.

1.3.5 The Human Impact

The changing climate is not merely an environmental issue; it carries many unpredictable and far-reaching negative consequences, particularly for human societies.

Health Impacts (250,000 deaths/annum)

Heatwaves are resulting in a rise in heat-related illnesses and fatalities, particularly affecting vulnerable populations, such as the elderly and people with pre-existing health conditions (WHO, 2022).

Additionally, the rising temperatures and continually shifting precipitation patterns are spreading vector-borne diseases such as malaria, dengue, and Lyme disease. The World Health Organization (WHO) estimates that climate change's direct and indirect health impacts could result in approximately 250,000 additional deaths annually between 2030 and 2050, primarily due to heat exposure, malnutrition, malaria, and diarrhea (WHO, 2021).

Furthermore, a study published in Environmental Research Letters indicated that heat-related illnesses could increase by 30% by 2050 in many regions (Mastrorillo et al., 2016). Additionally, vector-borne diseases are projected to expand, with a potential increase in the population at risk of malaria reaching up to 10% due to changing climate conditions (Béguin et al., 2018).

Economic Costs ($165 billion)

The economic effects of climate change are daunting. In 2022, the United States faced 22 weather disasters, each causing over a billion dollars in damages, including hurricanes, floods, and wildfires, with total damages surpassing $165 billion (NOAA, 2023). Globally, if decisive action is not taken, climate-related disasters could reduce GDP by as much as 18% by 2050 (Swiss Re Institute, 2021).

Displacement and Migration (216 million people)

Rising sea levels, extreme weather events, and resource scarcity are compelling millions to abandon their homes. By 2050, the World Bank predicted that climate change could displace as many as 216 million people globally (World Bank, 2021). This mass migration raises serious social and political challenges, particularly in fragile regions and developing and island nations that lack the capacity to face the impacts of climate change.

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