The impact of economic activities on climate change
Because it relies on fossil energies, 80% of the energy mix around the world, economic activity produces greenhouse gas, mainly carbon dioxide which contributes to global warming.
This phenomenon, theorized two hundred years ago by French mathematician Joseph Fourier, and which the IPCC, the International Panel of experts on Climate Change, has been describing for thirty years to alert us is no longer contested.
Since the preindustrial era, that is to say 1850-1900, the average global temperature increase has reached 1,3 degrees which is extremely fast on a geological timescale. And it is unprecedented in the history of mankind.
The accelerated global warming is already endangering the most fragile ecosystems, such as coral reefs and mountain glaciers. It is also responsible for the intensification of extreme climate events such as heat waves, droughts, forest fires, hurricanes, floods or coastal flooding.
Regarding socio-economic consequences of global warming, they are already on top of the list of the IPPC's main concerns.
They are also at the heart of the arguments to limit global warming to less than 2 degrees. Reaching or exceeding this limit, conflicts over resource sharing, population displacement or growing inequalities will create a higher risk for political and economic stability around the world.
The impact of climate change on economic activities
Paradoxically, all the studies that tempted to estimate the macroeconomic impacts of global warming have concluded so far that there would be limited GDP losses.
The National Bureau of Economic Research, an American private nonprofit research organization, a trusted source that for instance provides for official cycle dating in the US, led a study* that reshuffled the cards.
The authors of that study had quite an original approach of linking extreme climate events and the related economic losses in all countries these last sixty years not to local temperature variations but to global temperature variations.
Let's use a simple example to better understand this approach.
In the United States, the intensity of hurricanes which hit Florida or Louisiana is not so much due to temperature variations in the US but more at the surface of the Atlantic where the phenomenon was born.
According to this new approach, the economic cost of global warming seems much more higher than what was initially estimated. In case of 3-degree warming, global GDP per capita would be cut by 50% by 2100.
That's a severe shock that is equivalent, according to the authors of the study, to an endless armed conflict.
It is important to indicate that it is not loss in absolute terms but relative terms, that is to say estimated in reference to a scenario without climate change.
Strictly speaking, there is no necessarily impoverishment but a huge shortfall in earnings if there is no end brought to global warming.
The authors conclude their study with some meaningful figure.
The social cost of carbon, that is to say all the damages caused by the emission of a tonne of CO2, is estimated at around 1,000 dollars per tonne. At this price, much higher than what has been estimated so far, the opportunity to invest in alternative energies is justified not only from an ecological perspective but also from an economic perspective.
*The Macroeconomic Impact of Climate Change: Global vs. Local Temperature | NBER
