Friday, January 11, 2008

Economics of Global Warming

Global warming has become one of the most pressing issues of modern society. Once dismissed as the ravings of a fringe movement, people are increasingly realising that global warming is something that cannot be ignored. In particular the economic effects of global warming are very significant.

Economics Problems of Global Warming

  1. Rising Food Prices. Global warming is causing desertification of agricultural land. This is compounded by a shortage of water. This will cause problems in supplying food leading to rising prices. This will particularly affect countries which are net importers of food.
  2. Rising Sea Levels. Global warming is causing sea levels to rise. This will cause structural damage and loss of land. To fight rising sea levels is expensive in terms of flood defences. But, also even the best flood defences may not be able to prevent rising sea levels.
  3. Storm Damage. It seems that global warming is leading to an increased propensity for flooding and storms. This has led to huge insurance payouts. In 2007, the floods in the UK could be due to global warming. This will lead to higher insurance premiums. - Some areas may become uninsurable.
  4. Loss of Wildlife. Changing temperatures can cause havoc for wildlife. The economic cost may be hard to evaluate, but, if species go extinct it may prevent future medicines being invented.
  5. Migration. Global warming will cause migration from some countries to others. Those that suffer the most from global warming will see depopulation. There will be overcrowding in the other countries

Advantages of Global Warming

  1. Improved Agricultural Output. It is argued that higher temperatures may lead to increased food production in some countries. This conflicts with the issue of desertification. - Some areas will have increased production, some areas lower production
  2. Lower Heating Bills for Cold Countries. - But higher air conditioning costs for warm countries.
  3. The rise in Temperatures is only temporary. Some argue that world temperatures have always fluctuated and these rise in temperatures will only be temporary.


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