Economic loser's

It is clear that with climate change there are ‘winners’ (believe it or not) and losers’. Throughout this blog it has become evident who falls into which ‘category’. In previous weeks we have touched on the environmental impacts faced by developing nations in the form of droughts and floods, and the social impacts faced in the form of involuntary migration. In this penultimate post, the focus will be on the economic impacts that arise for developing nations and emerging economies as a result of climate change. The economic impacts of climate change are interesting, which is why I have kept it until the end. The thing is, economic impacts can occur as a result of social and environmental impacts – they are interlinked. Let’s take a drought for example. This is an environmental impact resultant of climate change. A drought means the land used for cultivation will dry out, which in turn means crops will not grow. Many people in developing nations rely on crops as a form of income. The cycle then continues.

Deschenes (2006) has argued that as temperature plus rainfall partake in direct involvement in farming, it remains common certainty that the main financial upsets should be undergone within this industry. The reason why Climate change is anticipated to have additional hostile monetary influences in developing nations than in developed countries is due to the fact that individuals in underprivileged nations have fewer prospects to acclimate to deviations in their inhabiting circumstances. A key source for this is that a lot of industries are superficial or absent, consequently deserting families and businesses diminutive area for change (Chambwera et al 2010). What this means is that when drought or floods occur and crop land becomes damaged, those living in developing countries are less able to earn their living through another source, whereas those living in developed nations are more likely to do so – emphasisng how economic impacts are harder felt in poor nations.  Economic impacts can also occur on a much larger scale, where a whole country’s economy is severely disrupted.  Let’s take Namibia for example. Studies in Namibia have advocated that over 20 years, yearly deficits to the Namibian economy will possibly reach 6 per cent of the GDP as a result of the influence climate change will exert on its unprocessed possessions only (Reid 2007). Within a poor country, there are also people who are better off than others. Thus this bearing on the Namibian economy will strike the lowliest of the residents toughest, with subsequent constrictions on work openings and deteriorating incomes (Reid 2007).

Due to a lack of adaptation strategies, any change in climate will have devastating monetary burdens on emerging economies, highly constraining their growth and contributing to already high poverty levels. Many studies within the climate change sector have indicated that there is a connection amongst diminutions in development and prosperity and climate change effects (OECD 2013). These studies have found that any increase in temperature will result in a decrease in the farming industry, and other natural resources thus indicating the significant economic damage that will be felt by developing nations. While the overall financial costs of climate change may be higher in developed nations due to expensive infrastructure and so forth, financial deductions as a percentage of GDP are tremendously higher in developing nations (OECD 2013). It should be remembered that although one off economic impacts can occur, catastrophes correspondingly diminish continuing economic progress as many developing nations tend to spend money on emergency respite and recuperating from disasters such as flood, instead of investing that money into progression and poverty alleviation (OECD 2013). Let’s take Honduras for example. The hurricane that hit that nation in 1992 had such severe economic impacts, that six years after the disaster struck, GDP was projected to be 6 percent to 9 percent below what it could have been, and should have been if the tragedy did not take place (OECD 2013). It is highly unlikely that a developed nation would take this long to recover from such impacts.

As this post draws to a close, I think that it has become clear to both me and you, that economic impacts are expected to be vastly adverse for the majority of emerging economies and poor nations, with even the slimmest global mean temperature rise. What has also become clear is that just as economic impacts can be instigated by environmental impacts – they can similarly have knock on effects. As economic impacts will be unevenly distributed, being felt by developing nations and the poorest inhabitants of developing countries, it is likely that there will be huge increases in disparity of health, access to satisfactory nutrition and hygienic water (Ravindranath et al 2006).