By: Louis Amoah
Climate change can have many effects on the economy. One reason for this is if climate change is involved in the development of more natural disasters, this will result in more economic destruction. When natural disasters occur, infrastructure systems can be destroyed further impacting the economy.
Many of the natural disasters that result from climate change are because of increases in global temperatures. How high the temperatures go will depend on how much we can keep 'greenhouse gasses' from polluting the atmosphere. According to climate researchers, “If there is a continuation of higher temperatures, the climate change that is impacting 22 sectors could cost the U.S. $520 billion each year. If the temperature remains at 2.8℃, then the amount will be lower” (Cho, 2019). This means that if the temperature starts to increase, it will have greater economic impact and cost more money. If more natural disasters happen, buildings and methods of transportation could be destroyed, wreaking havoc on the economy. According to some reports, this is already happening. For example, “In 2020, the United States experienced record-smashing 22 weather or climate disasters that each resulted in at least $1 billion in damages, including a record 7 linked to landfalling hurricanes or tropical storms” (Smith, 2021).
Climate change and an increase in natural disasters may also eventually contribute to the disruption of our food supply, the scarcity of water, impact on air and water quality, public health, and migration, and people moving to avoid the bad effects of climate change. Cay Vandervelde, a Federal Emergency Management Agency representative, discussed with me the National Oceanic and Atmospheric Administration claim that, “In the last 5 years, climate-related disasters caused $600 billion in physical and economic damages in the United States.” Some ways individual people can protect themselves are through savings, having insurance, access to loans, and access to government programs. Also, businesses and governments can take action related to climate change, tracking their carbon footprint and developing new businesses, focused on alternative energy sources that could have a positive economic impact as well as reduce climate change. For example, Cay explained that in 2018, the Carbon Disclosure Project (CDP) asked more than 7,000 companies to assess their financial risks from climate change. The CDP found that, unless they 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. On the other hand, 225 of the world’s 500 biggest companies reported that they believed that alternative energy options such as clean energy, resilient and green buildings, and energy efficiency could generate over $2.1 trillion in new business prospects.
In conclusion, climate change can impact every part of the world. Natural disasters can lead to destruction and can cost the world billions of dollars, negatively impacting the economy. However, people, governments, and businesses can all do something about it so that it won’t get worse over the years.