When we think of climate change, our mind often links us to the environment related impacts that come with it. Longer summers, more rainfall, melting glaciers, and rising sea levels are only a few examples of what we, as humans, might imagine our future amidst climate change to be like, however, research showcases that apart from the environment and society, the economy will also experience consequences of this problem. The agriculture industry, infrastructure, human health and productivity, tourism, and businesses are a few of the sectors that will be impacted.
1. Businesses and the financial market
Since climate change is known to increase the frequency and intensity of natural disasters, supply chain operations, factories, and transport are most likely to be effected by it. An increase in drought will make water more expensive, which will impact the cost and means of production as water is essential in the production of goods. Moreover, government regulatory policies have already begun imposing heavy taxation on factories for the burning of carbon emissions which will make it difficult for them to thrive in the future. In 2018, a study conducted by the Carbon Disclosure Project discovered that, unless companies took preemptive measures, 215 of the world’s 500 biggest companies could lose an estimated one trillion dollars due to climate change, beginning within five years. “For example, Alphabet (Google’s parent company) will likely have to deal with rising cooling costs for its data centers. Hitachi Ltd.’s suppliers in Southeast Asia could be disrupted by increased rainfall and flooding.”
2. Agriculture
The agriculture industry is a sector vital for international food security and economic stability. Despite advancements in food technology, there continue to be economies that completely rely on agriculture for revenue. Examples of this include, Punjab in India, Nebraska in the United States, East Anglia in the United Kingdom, and many more. Shifts in precipitation patterns, extreme temperatures, and prolonged droughts have severe consequences for crop yields and livestock production. As a matter of fact, Nebraska alone lost $440 million worth of cattle, and as of March, Iowa had suffered $1.6 billion in losses. Therefore, advancements in agricultural technology are essential for the industry to thrive in the future.
3. Human health and productivity
Since a major consequence of global warming is increased heat, the number of heat related illnesses such as heatstrokes and dehydration are expected to rise in the future. These reduce productivity and efficiency in the workplace causing companies to experience a decrease in revenues generated. In fact, The Lancet Countdown on Health and Climate Change estimates that heatwaves have already caused productivity losses equivalent to 301 million full-time jobs in 2018.
The graph below showcases the estimated GDP loss in Tunisia due to climate change.
The economic impacts of climate change are profound and arriving sooner than we may believe. Understanding these impacts is paramount for future generations to sustain themselves and the economy. We must strive for a prosperous and stable future by implementing mitigative and adaptive strategies to this dire problem.
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