The global climate is changing, and greenhouse gas emissions derived from human economic activities emerge as the dominant cause. The threats and the main challenges associated with climate change and the rising concentration of greenhouse emissions emphasise the need to understand climate change risks and their impact on sustainable economic development and progress. Some of the main dangers are briefly summarised in the report of the UK Independent Committee on Climate Change in 2017 as follows,
… humanity has prospered in a largely stable global climate. That stability is now at risk. The climate is changing, and human actions are causing the changes. Those actions mean that carbon dioxide levels are higher than at any time in human history, which will have an impact on all our lives. For example, rising sea levels threaten cities that have been built on the coast, changes in rainfall patterns will increase the risks of floods, and changes in water availability will affect agriculture and the crops that we rely on for food. (Bell and Thornhill, 2020, p.180)
The most significant climate change-related threats portray large increases in flood risk, exposure to high temperatures, and heatwaves. Changing temperatures affect water reserves, threaten wildlife and natural ecosystems, endanger domestic and international food production and trade, and lead to new emerging pests and diseases. In addition, incremental changes in the global climate led to extreme weather events worldwide and pose significant challenges to global trade and businesses, international supply chains, capital flows, and the movement of people (see figure 1 below). Global economic stability and the balance of power are under question as the world economies enter into conflicts derived from the need to share scarce natural resources. There are many connotations for interstate rivalry, with significant imbalances between the world's most developed and less developed economies. Furthermore, the relationship between climate change and domestic and international inequalities is a vicious cycle with disproportionate effects on specific groups affected by social exclusion, rising poverty levels, and marginalisation of vulnerable communities that contribute to exacerbate the climate change refugee crisis (Islam and Winkel, 2017).
Climate change has arisen as one of the most critical risks to the global economy. Excessive greenhouse gas emissions combined with economic growth models that have failed to integrate the importance of environmental protection and economic sustainability have drastically impacted nature and have led to global consequences that are very difficult to quantify and counteract.
The effects of climate change are considered humanity's most significant externality (see figure 2 below). Therefore, nations need to embark on collective initiatives seeking meaningful economic reform that materialises onto economic policies at the domestic and international levels that seek a more effective allocation and utilisation of scarce natural resources. Unfortunately, the lack of appropriate economic and financial planning has translated into severe costs to the environment and society compared to the generated economic benefits, leading to market failure, where government responses emerge as critical to helping address the problem of economic progress and development in a sustainable manner.
Unfortunately, the passivity of governments and the lack of action to ensure that appropriate policies that support economic sustainability are developed and properly implemented are impacting the ability to progress at the national and international levels. Another factor to be considered relates to the importance of international collaboration and the need for a united front that helps to address the climate change crisis. International interventions are essential for driving real progress and ensuring that countries are working at a domestic level to generate a global impact. No economy around the world can hide from the externalities of climate change, and global solutions supported by economic tools are badly needed to help prevent catastrophic consequences.
An honours degree in Economics, Finance, Data Analytics
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