Climate change is increasingly becoming a problem across the globe, and it is believed to originate from industrial activities that emit greenhouse gasses into the atmosphere. The scientific consensus regarding climate change accepts that human beings are the primary sources of climate change and it is changing rapidly thus becoming more dangerous than the earlier thought about the issue. Global warming manifests through the increased level of the mean temperature of the earth rising by 0.7 degrees Celsius in the 20th century expected to continue showing an upward trend. Heat has started manifesting some costs such as the frequency of extreme events and the recession of glaciers with an expectation of resulting in more massive and catastrophic effects if the temperature continues to increase. Despite the existence of these effects, global temperature is expected to raise at the rate of 2 degrees Celsius representing a temperature change that is higher than the pre-industrial levels leading to catastrophic changes (Beg et al., 2002). This paper examines the effects of climate change and approaches used by economists to address this challenge thus recommending a viable approach for treating this challenge. Climate change leads to an increased global temperature which causes a significant impact on ice, weather, and oceans. Increased heat has caused the frozen water on the earth’s surface to melt which enters the sea leading to the rise of the ocean level. Melting ice leads to dark ocean water capable of absorbing more heat and speeding up a relentless cycle of melting and heating. The issue of sustainability occurs in situations where oceans become hotter, expand, and become more acidic affecting marine life. In the current case, a third of carbon dioxide emitted from factories and other sources ends up in the ocean causing chemistry ending up in dissolving the shells of the sea creatures. According to Beg et al., (2002) ocean water is increasingly becoming more acidic recording a change of more than 40% compared to previous times. Climate change creates adverse effects on human life and prosperity suffers. Increased temperature and carbon dioxide in the atmosphere negatively affect agricultural activities essential for human survival. Farmers rely on normal patterns of climate to determine the types of crops they grow in a particular area. Climate change has resulted in unbearable changing weather patterns and unpredictable water supplies which have significantly reduced the levels of agricultural output. Warmer and polluted air creates adverse effects on human health resulting in smog. Warm air in the atmosphere depletes the ozone layer resulting in increased temperatures which cause various diseases such as irritating lungs and asthma. From this view, climate change negatively affects human life because high-temperature waves occur in a high rate of death resulting from health problems. In some cases, melting ice increases sea level leading to flooding capable of disrupting infrastructural facilities. Climate change makes natural habitats hostile forcing animals to migrate from their habitats seeking an alternative where they can stay while in some circumstances they die. For instance, as sea ice melts and disappears, animals that depend on ice such as polar bears and walruses struggle for their survival and become vulnerable to death. According to Smit & Pilifosova, (2003) polar bear is categorized as the first species that became endangered due to climate change. In the case of forests, increased temperatures expose forests to deadly infestations. For example, winters and long summers create a favorable environment for the survival of tree insects which makes it. At the same time, trees that have been weakened by drought have reduced defensive mechanisms making it difficult to thrive in an area infested with insects. It is essential for economists to consider the costs and benefits of implementing a strategy designed to mitigate climate change because all resources including human capital, and physical and natural resources are scarce. The issue of climate change is increasingly becoming an area of interest among economists. Challenges arise in the case of mitigating sources of climate change because of the scarcity of resources that should be applied to reducing the potential effects of climate change (Toman & Shogren, 2010). As a result, policy formulators have to consider the benefits and costs of enacting a particular policy thus evaluating the importance of the forgone alternative. Mitigating climate change indicates some resources in a country have to shift from their current use and devote them to solving climate change thus creating the idea of opportunity cost. According to Toman & Shogren, (2010) Policymakers also have to choose the appropriate time when to implement the policies. Climate change originates from the accumulation of greenhouse gasses in the atmosphere meaning that the effects of climate change are long-term. In this case, policymakers have to weigh the opportunity cost and benefits of enacting the policy now or in the future. Gas emissions originate from the fact that industries and manufacturers focus on maximizing current profits at the expense of future generations. In situations where the economic benefits exceed the expected output of future generations, there is an indication that production in the country is not sustainable because it leaves future generations worse off. However, decisions have to be made based on the opportunity cost of either choosing to act now or in the future.
Methods for Evaluating the Opportunity Cost Associated With Climate Change
Cost-benefit analysis
According to Harris et al., (2007) economists apply the concept for cost-benefit analysis to analyze and evaluate the costs and advantages of implementing a particular policy in an attempt of reducing climate change. Various strategies can be applied to reducing the adverse effects of climate change. Since resources are scarce, economists need to adopt the policy that will yield the most benefits.
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Marginal abatement cost
Economists have to make use of unit abatement cost evaluation which measures the value and benefits of using other sources of energy rather than fossil fuels that emit carbon dioxide to the atmosphere (Harris, 2007). In situations where policymakers implement policies targeting green gas emissions, they have to either choose to provide alternative sources of energy from gasses rich in carbon or make installments capable of absorbing gasses emitted from factories. Marginal abatement cost should identify the benefits and costs associated with decreasing one unit of carbon.
Discounted rate
In evaluating opportunity cost related to implementing climate change management policy now or in the future, economists make use discounted rate. Through this analysis, economists determine future costs and benefits that would occur if they implement climate change abatement policies. This process should consider all possible approaches that can be applied in mitigating climate change sources. The externalities associated with climate change have both economic and social impacts. For example, pollution is likely to harm society members by worsening their social welfare. The social effects of pollution depend on various factors such as geographical location and the ability of individuals to cope with the changes. In the United States, the population has been overgrowing in the coastal regions which have been vulnerable to air pollution, drought and heat waves. Externalities such as the exploitation of public goods and natural resources affect people from poor areas and old people who have fewer capabilities for adapting to the changing environment. For example, the United States population consists of older people likely to experience difficulties in adjusting to cases of climate storms, droughts, and increased temperatures. The US population comprising of the majority of people more than 65 years is expected to grow from 13% to 20% by the year 2050 at a time when the effects of climate change are likely to be severe (Wiebe et a., 2015). As a result, such people stand a chance of experiencing health problems due to increased temperatures. Increased temperatures and damage to the ecosystem are likely to cause problems to agriculturally based firms and the tourism industry respectively. In the case of increased temperatures, people located in areas favorable for producing different types of crops such as corn and cotton may not be able to deliver to the expected level because they depend on rainfall for crop production. For instance, the output of syrup and cranberries in the Northeast may decline significantly in the United States (Wiebe et al., 2015). In the case of damaging the ecosystem, the climate is likely to affect recreational and tourism activities. A warming climate leads to increased temperatures thus leading to the melting of the ice and increased wildfires thus damaging the building of the environment. In effect, the tourism industry attracts few visitors leading to a decline in the level of income. Environmental economists apply both adaptive, and mitigation approaches in an attempt to address issues associated with climate change (.Panteli & Mancarella, 2015). The adaptive approach encompasses mechanisms such as building walls and dykes to prevent problems of flooding resulting from rising sea levels. In other cases, economists for shifting farming mechanisms to address the effects associated with climate change. Mitigation appears to the most significant approach proposed by economists, and it includes fiscal policies. For example, environmental economists suggest that policymakers should enact a pollution tax with the objective of charging firms that emit carbon from operation and production activities to the atmosphere. Alternatively, economists propose tradable permits that can be issued to firms after paying some amount of money. In this case, firms will be in a position emit carbon into the atmosphere up to the expected limit. The central idea of this policy is that the money received for the permits can be used in navigating the adverse effects of carbon emissions. Environment economists suggest that there is a need of employing the valuation and tradeoff approaches when estimating the value of carbon emissions that companies exposed to the atmosphere thus increasing the level of pollution. In the case of a carbon tax, there are precise units of measuring the levels of carbon that firms emit into the atmosphere. In effect, economists suggest that the social costs of coal should be applied in getting the value of carbon. This information means that environmental economists estimate the financial impact on society of carbon emissions. According to Panteli & Mancarella, (2015), this process worked in the United States where policymakers estimated that the social cost of carbon ranged between $11 and $212. The carbon tax approach refers to a fiscal strategy that aims at internalizing external costs associated with carbon emissions to the atmosphere. This method calls for a need of ensuring that policymakers impose a per unit tax to every unit of carbon that is emitted into the atmosphere. Policymakers focus on calculating the proportion of carbon found in the fossil fuels used by a company in its production activities thus coming up with the amount of taxes that the enterprise is expected to pay. The effectiveness of carbon tax arises from the fact that the prices of fossil fuels will raise compelling people to minimize the misuse of fossil fuels thus reducing the level of gas emissions. In other situations, carbon taxes force people to look for alternative sources of energy such as solar and wind sources of power which they believe will be relatively cheap compared to the rising prices for fossil fuels. The carbon tax worked in the United States where coal appeared to be a leading source of energy that emitted the highest level of carbon. Calculation based on the commercial impact of each fossil revealed that $50 per ton of C02 would have the effect of increasing the price of fossil fuels by $44 (. If a tax of %100 is enacted, there is a possibility that the price will rise to $88 making such sources of fuel unaffordable thus reducing carbon emissions (Harris et al., (2007). This approach reduced the level of consumption of fossil fuels in the United States but is questionable that it has significantly reduced climate change. Since no single policy can address the issue of climate change, there is a need for combining both adaptive and mitigation plans for better results. Traditional and resource environmental economists explain that climate change is increasingly becoming an issue in the modern world. They believe that economic activities are the fundamental sources of greenhouse gasses and there is a need for coming up with viable strategies to address this challenge. However, these two sides differ in the approaches they suggest to be applied in solving issues of climate change. Traditional economists propose the need for coming up with adaptive mechanisms such as constructing dikes and providing alternative sources of energy to replace fossil fuels because of scarce resources and opportunity costs associated with mitigating climate change. On the other hand, resource environmental economists propose mitigation approaches by implementing fiscal policies such as carbon taxation and transferable permits. Policymakers have to evaluate the benefits and costs associated with each system thus identifying the best alternative. Climate change has several adverse effects on the atmosphere which affects the environment, and human and animal life thus calling for the need for environmental economists to formulate policies that can be applied in reducing this issue. Climate change leads to increased temperatures, rising sea levels, and the destruction of habitats. Economists believe that resource scarcity and opportunity costs associated with mitigating climate change provide challenges in solving the issue of climate change. They use different approaches such as cost-benefit analysis, marginal abatement cost, and discount cost rate. Climate change is associated with various externalities such as pollution, damage to the ecosystem, and increased temperature which affects agricultural firms, coastal communities, and future generations. Policymakers provide both adaptive and mitigation where carbon tax appears to be an appropriate approach for addressing climate change.
References
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