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The Financial Cost of Climate Change

By: Kelly Fenn - Updated: 27 Dec 2012 | comments*Discuss
 
Climate Change Energy Uk Save Saving

A recent report by economist Nicholas Stern put the effects of climate change into hard monetary terms. The outcomes of the report were an eye opening indication of what the cost to the environment could be if we act now or what will happen if we don’t change out ways.

Understanding how environmental costs equate to what we’ll have to pay as a nation, and as individuals, helps demonstrate the need for changing our lifestyles even more strongly.

The Hard Facts

According to the Stern Review: “The scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response.” The report calls for action to tackle climate change now rather than later. In particular, a rise in global temperatures, melting glaciers, flooding, extreme weather and extinction were cited as among the principle effects of climate change.

Rise in Global Temperatures

Stern argues that if we don’t reduce carbon emissions, there is a 75% possibility of temperatures rising over the next 50 years by two to three degrees and a 50% chance of an increase of five degrees. That might not sound like much, but the effects on the world ecosystem could be devastating.

Extreme Weather Conditions

As the glaciers melt, more adverse and extreme weather conditions will become more regular. And Stern wasn’t just referring to a few heat waves here in the UK. According to Friends of the Earth, floods in Mozambique, forest fires in Indonesia, hurricanes in Florida and storms in the UK would all be commonplace. Increases in temperature will mean that drought will be more widespread, and agriculture and crop yields- particularly in the third world- will be seriously damaged.

That said, flooding too will also be on the up. Rising sea levels will impact the risk of floods in coastal areas, including global cities such as London and New York. Stern suggests that 200 million people could be permanently displaced as a result of losing their homes from flooding. This could put an increased pressure on the available land left, particularly as global populations continue to rise.

Species of wildlife would also suffer at the hands of the changing environment. According to Stern, up to 40% of species face extinction if nothing is done to combat climate change.

How Much Acting Now Will Cost

Stern estimates that it would cost one per cent of the UK’s Gross Domestic Product (GDP) to stabilise current emissions over the next 20 years and reduce by up to three per cent thereafter.

How Much Doing Nothing Will Cost

In the worst case scenario, the global economy could shrink by a massive 20% as a direct result of the massive effects of climate change over the next century. Extreme weather conditions alone would reduce global GDP by one per cent. And depending on by how much global temperatures rise by, global output could reduce by up to 10%.

For all these reasons, now rather than later is the time to act. Many environmental groups have called for the government to set stricter targets than the 20% cut in CO2 pollution by 2010 the UK has already committed to. As a result of the Stern Report’s findings, the government have committed to working with the World Bank to fund projects to fight climate change worldwide, and to set bigger emissions targets by 2030.

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