Effects of Global Warming on the Australian and Global Economy - Research Proposal Example

Effects of Global Warming on the Australian and Global Economy Introduction Global warming is defined as a general rise in the mean temperature at the surface of the earth, or the bottom part of the atmosphere (Parliament of Australia 2008). Although global warming and cooling have been occurring naturally throughout the history of the earth due to natural climate variability, today’s high rate of global warming is mainly attributed to human actions which change the composition of the atmosphere (Parliament of Australia 2008). The resulting changes can have adverse impacts such as climate change, which is defined as a clear and sustained change (over many decades or longer) in the constituents of climate such as precipitation, temperature, winds or atmospheric pressure (Parliament of Australia 2008). The climatic changes caused by global warming have a significant impact on economies both at the national and global scales. For instance, climate changes affect rainfall patterns and hence agricultural activities, and are also associated with disasters such as floods – which negatively affect the economy. Against this backdrop, this report will discuss the various effects that global warming has on the economy of Australia as a country and on the global economy in general. Based on the findings of the research, recommendations will be provided on how Australia and the world in general can mitigate the economic impacts resulting from global warming. Effects of global warming on the economy of Australia Global warming has caused many changes in Australia’s climate. For instance, the all-Australian average yearly temperature has increased since 1910 and especially since the mid-20th century (Commonwealth of Australia 2007, p. 7) (figure 1). Australia’s daily mean temperatures have risen by 0.9 °C since 1910 (Climate Change in Australia 2013). Figure 1: Yearly Australian and global mean temperature Source: Commonwealth of Australia (2007, p. 7) The main cause of the temperature increase is an increased concentration of carbon dioxide in the atmosphere resulting from the burning of fossil fuels since the industrial revolution (Climate Change in Australia 2013). The high level of human activity that causes global warming (e.g. mining, manufacturing) is one of the reasons why Australia is much affected by global warming. According to the Australian Bureau of Statistics (2010), Australia has about 0.3 per cent of the world’s population, but contributes approximately 1.5 per cent of total greenhouse gases (gases that absorb infrared radiations and radiate heat). This puts Australia among the highest per capita greenhouse gas emitting countries. As a result of the average rise in temperature in Australia, the Australian continent has warmed and so have the oceans around the continent. These increases in temperature have repercussions for almost all natural systems in Australia. They also affect health and other sectors such as fisheries, agriculture, forestry and many others that are critical to the Australian economy (Commonwealth of Australia 2007, p. 7). Apart from changes in annual temperatures in Australia, rainfall patterns have also changed considerably as a result of global warming. According to Commonwealth of Australia (2007, p. 7), notable increases in rainfall have taken place in tropical regions as well as eastern New South Wales. In contrast, the south west region of Western Australia and parts of the eastern and southern fringes show a decline in precipitation through the second half of the century. These changes in rainfall patterns are attributed to a combination of increased greenhouse gas emissions (e.g. carbon dioxide, methane, nitrous oxide and other gases), land-use change and natural climate variability. These findings are supported by a report by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) which indicates that there is no doubt that climate change caused by rises in greenhouse gas is affecting seasonal shifts in patterns of rainfall. CSIRO’s analysis of climate change showed that rising temperatures, hence evaporation as a result of the pronounced greenhouse impact, affect Australia’s water resources, in addition to any reduction in rainfall (Shi, Ribbe & Cowa 2007). Changes in rainfall patterns are also associated with dryness in some areas which initially received rainfall. Key areas affected are the mid-latitude regions and elsewhere around the globe, more intense and persistent droughts have been witnessed over wider areas since the 1970s (Commonwealth of Australia 2007, p. 7). Commonwealth of Australia (2007, p. 7) indicates that variations in climate and damage resulting from harsh weather are associated with significant economic and social costs to Australia, suggesting that the country has a climate-sensitive economy. Examples of the climate related events that have major economic implications include droughts and extreme occurrences such as cyclones and hail storms. According to Commonwealth of Australia (2007, p. 8), in every year that there is a drought in Australia, the country’s farm production drops by at least 10 per cent or more on average. For example, the 2002-2003 drought is estimated to have lowered Australia’s agricultural output by 26 per cent, and the gross value of farm production fell from $38.4 billion in 2001-2002 to $31.5 billion in 2002-2003. Similarly, it was estimated that another drought in 2007 would reduce Australia’s economic growth by 0.75 percentage points compared to what would have been expected in 2006-2007 (Commonwealth of Australia 2007, p. 9). Another impact of global warming on agricultural output is due to the fact that the livestock, cropping and forestry sectors are affected by changes in climatic conditions caused by increases in atmospheric carbon dioxide (Preston & Jones 2006, p. 23). Since all these sectors are affected by issues like pollution and water shortages, their productivity increases as the level of activity causing global warming increases. Commonwealth of Australia (2007, p. 9) and Kingwell (2006, p. 8) note that Australia’s insurance industry has also been affected by the effects of global warming due to occurrences like hail, bushfires due to drought, tropical cyclones and other windstorms (see table 1). However, the average cost of these occurrences is large and not all losses are reflected through insurance. Even then, Commonwealth of Australia (2007, p. 9) notes that between 1976 and 1999, the average yearly cost of disasters emanating from weather conditions was approximated to be $942 million. A third of the losses was attributable to floods, another one third due to severe storms and a nearly equal percentage of the losses (28 per cent) was attributable to cyclones. Notably, costs of insurance payouts due to weather-related disasters continue to rise in Australia. Table 1: Australia’s top 20 insurance losses between 1976 and 2006 Source: Commonwealth of Australia (2007, p. 9) Other economic losses that Australia has experienced due to global warming include damages to natural attractions such as the Great Barrier Reef. Although this reef is a major tourist attraction for Australia, being a UNESCO World Heritage site, it is already showing signs of dying due to coral bleaching caused by an increase in ocean temperature (World Preservation Foundation 2013; Preston & Jones 2006, p. 5). The dying of the Great Barrier Reef is a major loss not only to Australia’s environment, but also in terms of the revenue attributed to tourism. Effects of global warming on the global economy The effects of global warming are also reflected on the global economy, with the effects at the national level (like in Australia) being replicated worldwide. The affected sectors such as health and agriculture are also affected globally in different ways. Studies conducted by the UN’s Intergovernmental Panel on Climate Change (IPCC) show that changes in humidity, precipitation and temperature are associated with increased thermal stress, respiratory diseases, and increased prevalence of infectious vector borne illnesses (Pappis 2011, p. 67). Pappis (2011, p. 67) also explains that an increase in average temperature across the globe can lengthen the growing season in areas with relatively cool fall and spring, and it can also adversely affect crops in areas where summer heat already strains production. It is also indicated that high temperature can increase the rate of soil evaporation and increase chances of severe droughts, which may adversely affect agricultural production. Additionally, changes in rainfall due to global warming can impact soil moisture and soil erosion rates, both of which are critical for crop yields. Further, higher levels of ground level ozone, which are enhanced by both greenhouse gas emissions and high temperature, limit the growth of crops. Finally, changes in the severity and frequency of heat waves, floods, hurricanes and drought, which are anticipated by global climate models but are more difficult to predict, may also adversely affect agriculture and other sectors of the economy such as tourism, transportation and health. An editorial article by Oil.com indicates that a study conducted by the Carnegie Institution over 20 years to 2007 to determine the impact of global warming on crop production revealed that increasingly warmer temperatures reduced crop yields. Those lower yields accounted for a net economic loss of $5 billion each year. Oil.com also quotes data from the Stern Review, which shows that climate change will have a severe effect of economic growth that 1 per cent of the world GDP will be required to mitigate the impacts. This is a lot of money given that the world’s GDP was $70 trillion in 2008 according to World Bank statistics (Oil.com 2009). Already, in recent years, climate change related catastrophes have led to many deaths and caused economic losses in many sectors. An environmental corresponded with the Guardian newspaper, Harvey (2012), indicates that climate change contributes to the deaths of about 400,000 people per year and costs the world more than $1.2 trillion, which is about 1.6 per cent of the global GDP. According to Harvey, the impacts are being experienced most in developing countries, where damage to agricultural production due to extreme weather conditions associated with climate change is contributing to deaths from malnutrition and other related conditions. Even in developed countries like the United States and in Europe, the effect has been significant. For instance, in the US, Hurricane Katrina led to losses estimated at $125 billion while the European heat wave in 2003 resulted in damages estimated to cost $15 billion (World Preservation Foundation 2013). Policy recommendations and suggestions for mitigating the impacts of global warming As it has noted in this report, the factors that cause the high rate of global warming that is experienced today are mainly related to human activities. Key sectors that contribute to greenhouse gas emissions include manufacturing, mining and transportation among others. It is thus necessary to intervene in the sectors that contribute huge proportions of greenhouse gases to reduce the impact of global warming on the economy. For instance, it has been suggested that it is possible to mitigate the worst environmental and economic cost of global warming by reducing carbon dioxide emissions (Skarbek 2011). Transportation is one of the major contributors to air pollution across the world and hence global warming (Sinha & Labi 2007, p. 278), and this is one area to start with in the mitigation efforts. Efforts to reduce automotive air pollution are already being spearheaded by industrialised countries through a wide array of measures such as vehicle engine standards, legislation and enforcement, promotion of less polluting forms of transport, use of improved fuel quality, alternative fuels, and transportation planning and traffic management (Sinha & Labi 2007, p. 278). Such measures should be promoted globally especially in the highly industrialising countries like China, Brazil and India. There is also need for measures like avoiding deforestation and promoting reforestation and afforestation to mitigate the impact of floods and windstorms and promote carbon sequestration by trees. Other measures that are being adopted in developed countries like Australia (through its Clean Energy Future program) – cited by the Australian Bureau of Statistics (2013) – include: introducing a carbon pricing strategy, promoting innovation and investment in renewable energy, promoting energy efficiency; and creating opportunities in the land sector e.g. phytocapping landfills, afforestation and reforestation, and recycling waste to produce biofuels. Such measures need to be adopted and implemented not only in Australia but also in other countries across the world. Conclusion Global warming is the increase in the earth’s surface temperature and is mainly contributed by an increased concentration of greenhouse gases, especially carbon dioxide. The high temperature causes climatic changes which affect aspects such as rainfall patterns and is associated with the occurrence of disasters such as droughts and extreme weather conditions such as cyclones, hurricanes and hail storms. These occurrences affect various sectors of the economy including agriculture, health, insurance, tourism and many others. As it has been discussed, these sectors incur heavy losses as a result of the effects of climate change. Various measures have been proposed to mitigate the impacts of greenhouse gases including reducing air pollution in the automotive industry, adopting a carbon pricing strategy, promoting innovation and investment in renewable energy, promoting energy efficiency, and adopting land use measures such as phytocapping landfills, reforestation and afforestation, recycling waste to produce biofuels, and avoiding deforestation. References Australian Bureau of Statistics 2010, ‘Feature article: Climate change in Australia’, Accessed at: (3 November 2013). Australian Bureau of Statistics 2013, ‘Chapter 5: Greenhouse gas emissions’, Accessed at: (4 November 2013). Climate Change in Australia 2013, ‘Climate change in Australia’, Accessed at: (3 November 2013). Commonwealth of Australia 2007, ‘Climate change in Australia’, Accessed at: (3 November 2013). Harvey, F 2012, ‘Climate change is already damaging global economy, report finds’, The Guardian, 26 September 2012, Accessed at: (4 November 2013). Kingwell, R 2006, Climate change in Australia: Agricultural impacts and adaptation, Australasian Agribusiness Review, Vol. 14, Paper 1, Accessed at: (4 November 2013). Oil.com 2009, ‘The economic impact of global warming’, 10 December 2009, Accessed at: (4 November 2013). Pappis, C P 2011, Global impact of climate change’ in Climate change, supply chain management and enterprise adaptation: Implications of global warming on the economy, Information Science Reference, Hershey, PA. pp. 66-92. Parliament of Australia 2008 ‘Climate change and global warming - what's the difference?’ 18 November, 2008, Accessed at: (3 November 2013). Preston, B L & Jones, R N 2006, ‘Climate change impacts on Australia and the benefits of early action to reduce global greenhouse gas emissions’, CSIRO consultancy report for the Australian Business Roundtable on Climate Change, February 2006, Accessed at: (3 November 2013). Shi, G, Ribbe, J & Cowa, T, 2007, ‘Australian rainfall – a view of the future’, CSIRO, 4 October 2007, Accessed at: (3 November 2013). Sinha, K C & Labi, S 2007, Transportation Decision Making: Principles of Project Evaluation and Programming, John Wiley & Sons, New York. Skarbek, A 2011, ‘Failing to act on climate change costs us billions’, The Conversation, 14 April 2011, Accessed at: (4 November 2013). World Preservation Foundation 2013, ‘Climate change cost’, Accessed at: http://www.worldpreservationfoundation.org/topic.php?cat=economicCosts#.UnZumlNahyI> (3 November 2013). Read More