Contain Our Climate

Although there are economists who may argue that global climate change has little impact on our economy today, there is strong evidence that ignorance on this topic will lead to a financial hole in the long run. In order to gain awareness on this stagnant approach, Frank Ackerman and Jonathan M. Harris analyze economic climate change in their articles. Some of these topics regarding economic climate change include the monetary impact that climate change will have on future generations, the impact on the economy after climate change damage and the history of policies that have been made in response to economic climate change. Once these points have been clearly assessed and explained, the next step is to ponder possible solutions to prevent these scenarios from happening.
The economics of climate change is mainly focused on our future generations who will be affected by the decisions made in the present time. Climate change is not seen as so urgent as it is stressed when it is viewed in a small span of time but when this span is enlarged, the cost of remedying climate change greatly increases. As CO2 increases, the damage it will do to the world increases as well which will also lead to money needed to fix whatever damages might occur. In order to pay for an amount that will be incurred over time, economists use the discount rate so they can account for a future value. The reason this rate is used is because an amount today would not be worth the same amount in the future since it could gain interest. Understanding the discount rate helps grasp an idea on how much money will be needed today in order to pay for the future but if no investments are made for the future, then the damage done by climate change over time could considerably exceed what would have been the cheaper option.
If left neglected, climate change poses a huge threat to the world and the economy. Although some economists might argue that the impact of climate change is not so great of a threat, being idle is a great risk. The main source of climate change comes from the greenhouse effect which works to keep the planet warm but through human emissions of CO2, this effect is now changing the planet negatively. As the Intergovernmental Panel on Climate Change point out, “discernible human influences now extend to other aspects of climate, including ocean warming, continental average temperatures, temperature extremes and wind patterns.” The effects of climate change will massively hit the world population of the poor. Richer nations will most likely have the resources to adapt to whatever change may come but poorer nations will not have the technology in order to prevent what impact climate change inflict. Therefore the poor nations might have to come up with a new tax or other method in order to collect money to fix any damages, hitting low income individuals the hardest. This will further raise the gap of inequality between the rich and the poor, increasing a nation’s GINI coefficient. With an increased GINI coefficient, lower income individuals might resort to crime which will have an impact on that nation’s GDP. Climate change policy should be observed in order to avoid hypothetical scenarios such as that.
To stop detrimental climate change, policies are needed that influence a wide selection of countries and individuals. One of the most well-known international agreements made concerning climate change is the Kyoto Protocol. The Kyoto Protocol was established between industrial countries to lower emissions by 50%-80%. The question that arises is where the country will reduce emissions or provide incentive to individuals to reduce emissions. Since gasoline is inelastic, there cannot be much reduction in that area so factories and other facilities that produce emissions must be affected by the Kyoto Protocol. Although the U.S. has now dropped out of the Kyoto Protocol, this was one of the most efficient methods of reducing emissions.
Despite all of the risks and challenges climate change poses, there are ways to combat it and halt it. Possibly the most efficient method would be to renew an emission reduction agreement between countries as this will have an impact on a great portion of the planet. Another solution that could be used in conjunction with an agreement would be a progressive carbon tax which would gather funds in order to alleviate the amount future generations would have to spend. A progressive carbon tax would be the most high-yielding method of collecting funds. These are some of the most effective ways climate change can be dealt with.
In conclusion, climate change poses a serious threat to the economies of the world. Inactivity on this issue is unwise, inconsiderate and unethical. The world today must identify this obstacle and face it head on with no exceptions allowed.