Dr Mohd Arif
Global climate change has become one of the dominant discourses in the scientific and public policy arena. Various studies from scientific research shows that global warming is now a real phenomenon, as there has been an unusual rapid increase in the earth’s average surface temperature over the past few decades, primarily due to the unprecedented accumulation of carbon dioxide resulting from the burning of fossil fuels, together with emissions of other human induced greenhouse gases. The effect of this temperature rise includes increased frequency of severe weather events (such as heat waves, hurricanes and tornadoes), proliferated intensity of storms, and sea level rise. These changes, no doubt pose serious threats to the welfare and existence of mankind and other living organisms on the earth by impacting the functioning of the ecosystem, biodiversity, and human health. According to the naturalist David Attenborough (An English Broadcaster and Natural Historian), Climate change is humanity’s greatest threat in thousands of years.
The economics of climate change refers to the study of the economics costs and benefits of climate change, and the analysis of the economic impact of actions targeting at limiting its effects. However, calculating the economics of climate change is challenging due to the fact that there are huge uncertainties in the estimation of both the costs and benefits related to climate change. The precision of the time horizon, over which benefits and costs of climate change would accrue, is debatable. Also there are uncertainties over threshold for climate change impacts and the pace and form of technological innovation that can take shape in the future.
Furthermore, the effects of climate change over the countries are not uniform across the globe. Different parts of the world are likely to be affected differently. Countries closer to North and South poles will experience warmer temperatures and once inhospitable land will experience melting of ice. Small island nations are at risk of extinction due to rising sea level. Low-lying island and countries are at a greater risk of flooding both from rising sea levels and increased precipitation. Tropical countries near the equator are likely to experience unbearable heat. Some of the countries are already experiencing more frequent events of severe weather.
The economics of climate change is further complicated by the fact that most of the developing countries can’t afford the cost of mitigation or adaptation. The 2018 Environmental Perfor-mance Index (EPI) of Yale University ranks 180 countries on 24 performance indicators across 10 issue categories covering environmental health and ecosystem vitality. These metrics help provide an estimation at a national scale of how close countries are to establishing environmental policy goals. Accordingly, most of the Developing Countries lying in the South dominants, i.e. the lower part, have poor ranking in Environmental Performance Index. Among the bottom 10 countries in the ranking, three (India, Nepal and Bangladesh) are from South Asia. India ranked just 2 points above Bangladesh (Bangla-desh’s position is 179) out of the 180 countries.
There are also considerable debate in the discourse on climate change with respect to the policies and actions needed to address the challenges. Two instruments are widely referred in the policy discussion. The first is the carbon tax, which is the mandatory fee charged for the emission of a given quantity of carbon dioxide or some other greenhouse gas. The second is carbon trading, which is buying and selling of carbon credits – Abstract instruments like money, where each represents the right to emit one tonner of carbon dioxide or an equivalent amount of other greenhouse gases. The other policies include technology promoting programmers. One other instrument, which is less explored but can be effective, is the liberalization of trade in environmental goods (EGs), which can play a crucial role in protecting the environment as well as promoting international trade in EGs.
Conference which was held in Katowice, Poland in October, 2018, concludes that “if we don’t take action, the collapse of our civilizations and extinction of much of the natural world is on the horizon”. Moreover, UN Secretary-General, Antonio Guterres, speaking at the opening ceremony said climate change was already “a matter of life and death” for many countries. It is also seen in developing countries now-a-days too for the reason of climate change. In many cities in India, the rising temperature and floods in various areas are the main reason for that. Antonio Guterres also explained that the world is “nowhere near where it needs to be” on a transition to low carbon economy. Meanwhile, the World Bank has announced $200bn in funding over five years to support countries taking action against climate change.
Trade has a positive effect on the environment only if environmental policy advances alongside trade liberalization. However, most of the developing countries are seriously lagging behind in conceptualizing as well as in building national capacities to the implement these aforementioned instruments.
One of the important challenges in the economics of climate change is the political economy too. Both the global and National political economy factors are critical in addressing climate change issues. US President Trump’s unfavorable attitude towards the warning of devastating effects of climate change, and eventually the US’s withdrawal from Paris Climate agreement, have created uncertainties for a global partnership. At the national level, many developing countries, due to their national priorities of industrialization and lobbying power of different quarters, find it extremely difficult to contain the polluting industries. Therefore, developing countries have an uphill task in future given the challenging economics of climate change.
(The author is Assistant Professor (Guest) Department of Economics BGR Campus Pauri HNB Garhwal University, Uttrakhand)
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