Richard Tol discusses the various economic impacts that will result from climate change in his paper “The Economic Effects of Climate Change”. Some of the economic consequences of climate change fall into the following areas:
Feedback loops could create abrupt climate change with the collapse of the West Antarctic Ice Sheet or a massive release of methane from melting permafrost. Because change may not be gradual, the benefit to well-positioned countries could be either subtle or stark. The countries that will benefit the most from climate change will be those at higher latitudes due to the low risk of increased tropical storms, low risk of increased flooding and low risk of increased desertification. Countries that aren’t reliant on ocean currents for favorable weather will be at low risk for an ocean current collapse. The UK, Ireland, Norway, and Iceland would be worst hit by a shutdown of the gulf stream thermohaline circulation. South Africa is at risk for a collapse of the Benguela Current. Countries with high elevations with populations away from the coasts will benefit from increased tourism money and will be at low risk to sea level rise. Countries with access to the Arctic Ocean will benefit from increased oil production and lower sea transport costs. These include Canada, Greenland, Iceland, Norway, Russia and the United States, but all of these countries except Russia face risks from ocean current collapse and sea level rise. In Canada, for instance, nearly 40% of the population lives near the ocean.
The remaining countries at latitudes above 45° with high elevation and low amounts of population in coastal areas are: Austria, Belarus, Czech Republic, Hungary, Liechtenstein, Luxembourg, Russia, Slovakia and Switzerland. Countries with abundant natural resources like fresh water and agricultural land, on a per-capita basis, will be better off. Belarus, Hungary and Russia are the only countries from this list with a physiological density (pop per km² of arable land) better than the world average. Hungary and Russia are better than the world average on a renewable water resources per person basis. Due to the enormous benefit from increased Arctic Ocean sea travel, increased access to arctic oil and increases in agricultural productivity across the vast stretches of Siberia, Russia comes out a clear winner.
Russia will receive increased tourism revenue as the country becomes warmer. The warmer weather will increase agricultural production, decrease cold-related deaths, reduce the cost of heating, lower expenditures for clothing and reduce the amount of snow-related traffic disruptions. Russia isn’t at risk to increased tropical storms or an ocean current collapse, and the country will benefit greatly from reduced sea ice in the Arctic Ocean allowing more oil exploration and allowing new shipping lanes to open up.
Positive Effects | Negative Effects |
Less sea ice -> lower cost of oil production, lower cost of sea transport | Desertification in some areas -> death and agricultural loss, cost to redesign water management systems |
More rain in some areas -> higher agricultural productivity | More floods in some areas -> death and agricultural loss, cost to redesign water management systems |
Ocean current collapse -> some regions get colder | Ocean current collapse -> some regions get colder (eg. Western Europe) |
Higher wind speeds in some areas -> decreased cost of wind and wave energy | More severe and frequent tropical storms -> death and property damage, higher building standards/higher cost of construction |
Tourists will move towards higher latitudes and elevations | Tourists will move towards higher latitudes and elevations |
Warmer weather -> lower heating costs, fewer traffic disruptions from snow and ice, fewer expenditures on clothing and food | Warmer weather -> Higher cost for cooling (from homes to power plants), more wildfires |
Biodiversity Loss -> willingness to pay for nature conservation <1% of income | |
Ocean acidification -> loss of fisheries | |
Sea Level Rise -> property damage, agricultural loss, saltwater intrusion into groundwater |
Feedback loops could create abrupt climate change with the collapse of the West Antarctic Ice Sheet or a massive release of methane from melting permafrost. Because change may not be gradual, the benefit to well-positioned countries could be either subtle or stark. The countries that will benefit the most from climate change will be those at higher latitudes due to the low risk of increased tropical storms, low risk of increased flooding and low risk of increased desertification. Countries that aren’t reliant on ocean currents for favorable weather will be at low risk for an ocean current collapse. The UK, Ireland, Norway, and Iceland would be worst hit by a shutdown of the gulf stream thermohaline circulation. South Africa is at risk for a collapse of the Benguela Current. Countries with high elevations with populations away from the coasts will benefit from increased tourism money and will be at low risk to sea level rise. Countries with access to the Arctic Ocean will benefit from increased oil production and lower sea transport costs. These include Canada, Greenland, Iceland, Norway, Russia and the United States, but all of these countries except Russia face risks from ocean current collapse and sea level rise. In Canada, for instance, nearly 40% of the population lives near the ocean.
The remaining countries at latitudes above 45° with high elevation and low amounts of population in coastal areas are: Austria, Belarus, Czech Republic, Hungary, Liechtenstein, Luxembourg, Russia, Slovakia and Switzerland. Countries with abundant natural resources like fresh water and agricultural land, on a per-capita basis, will be better off. Belarus, Hungary and Russia are the only countries from this list with a physiological density (pop per km² of arable land) better than the world average. Hungary and Russia are better than the world average on a renewable water resources per person basis. Due to the enormous benefit from increased Arctic Ocean sea travel, increased access to arctic oil and increases in agricultural productivity across the vast stretches of Siberia, Russia comes out a clear winner.
Russia will receive increased tourism revenue as the country becomes warmer. The warmer weather will increase agricultural production, decrease cold-related deaths, reduce the cost of heating, lower expenditures for clothing and reduce the amount of snow-related traffic disruptions. Russia isn’t at risk to increased tropical storms or an ocean current collapse, and the country will benefit greatly from reduced sea ice in the Arctic Ocean allowing more oil exploration and allowing new shipping lanes to open up.
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