Economics of Climate Change

Economics of Climate Change

“I don’t believe it,” these were the words uttered by President Donald Trump when asked about his own administration’s report on climate change. The report called the ‘National Climate Assessment,’ mandated by the Congress and published by the White House, per law set in 1990, gave starkest of the warnings to current date concerning climate change. The report, however, couldn’t change Trump’s administration’s stance regarding climate change.

Issued by 13 federal agencies, the report puts forth the depreciating effects of climate change on the economy, health and the environment. Record-breaking wildfires in California, unprecedented crop failures in the Midwest and crumbling infrastructure in the South were some of the significant forewarnings mentioned in the report.  Most notably, the report states the US economy will suffer losses up to one-tenth of the GDP by the end of the century. Interestingly, this assessment by the report is antithetical to the precedent under which President Trump withdrew his country’s candidature from the Paris Climate Agreement.

The retraction from the above-mentioned agreement was followed by 78 rollbacks on environmental rules, which were placed by the Obama administration to fight climate change.  In concomitance to the reversals, new environmental standards were drafted by the regulators of Environmental Protection Agency with respect to ease of emission for Cars and Trucks. Citing concerns regarding the automobile safety and considerable addition of cost to the automobiles, especially for low-income customers, the agency decided to do away with old regulations. Current regulations of the EPA require the fleet of new vehicles to get 36 miles per gallon in real-world driving by 2025. Scott Pruitt, the administrator EPA alleged that his predecessors were dearly after the lives of specialized truck manufacture by placing such stringent restrictions on the emissions from these vehicles. So much so, that these regulations could have put them out of business.

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Although the new regulations have placed business and trade at the center of economic agenda, the NCA states that trading is most likely to bear the maximum losses because of climate change. Fluctuating weather events across the globe will undoubtedly affect the US trade and economy, including export and import prices as well as supply chains. Substantiating this claim by referring to an American company based in Thailand, called Western Digital which sustained $199 million worth in losses due to extreme flooding in the region. It led to a severe reduction in hard drive shipments consequently doubling the prices of hard drives and affecting other companies like Apple, Hewlett Packard, and Dell. The reports say that more such disruptions are to follow with the shrinking consumer market abroad.

Climate change is bound to affect the economy from within the country as well. With extreme droughts, heat and unpredictable heavy downpours, the farm belt of the country is at maximum risk. Climate change will lead to an increased challenge to livestock health, decline in quality as well as quantity of the crops and mid-season crop failures. Raging and record-breaking wildfires in California have already signaled what is to come. With fires proving to be a plague for the Western states of America, the climate change will break the order and even states in the South-East, which have had no experience with the annual fire seasons, will succumb to its spate.

Since it is conspicuous enough for anyone to understand that climate change is going to affect the US in more than one way, what do you think America’s policy should be regarding it? Should the government increase environmental regulations to prevent climate change?

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