Climate change (CC) is having a massive impact on the global economy. The financial aspects of CC are not limited to only environmental disasters but also mitigation and adaption efforts taken at an international level to combat the effects of CC. At a global level, billions of dollars are annually spent on issues related to CC through the public and private sectors. Even Pakistan spends almost 8 percent of its total annual budget directly or indirectly on CC.
The unprecedented heavy rains and subsequent floods brought by CC which damage infrastructure and cause financial losses in whole world have raised alarms globally. In addition to this, the agriculture sector, which provides raw materials to industries and food to whole world also gets affected by floods, increasing temperature and droughts. This also becomes a financial burden on the economy of a country like Pakistan where most of the population is directly or indirectly dependent on the agriculture sector.
There are other effects on public health. Phenomenon related to CC is known to cause viral and respiratory diseases. It demands more spending in the health sector and reduces the efficiency of the people who contribute to a country’s national economy.
Under the concept of carbon pricing, all countries are provided carbon credits to put a ceiling on their carbon emission. The countries crossing their allotted upper limits can buy carbon credits from countries that are utilizing a small portion of the carbon credits allotted to them
If we look at mitigation efforts to fight climate change, we can find heavy investments in clean technology projects. The world is moving towards and promoting clean energy projects in form of solar, nuclear, wind and hydro power projects. Similarly more environmental friendly inventions and strategies are being introduced in global markets. Super Critical Technology (SCT) is one of the examples of cutting edge technology that countries are using to reduce carbon emissions from coal power projects.
New strategies like carbon pricing are being introduced the world over. Industrialised countries are emitting more carbon into air in comparison to developing countries. So under the concept of carbon pricing, all countries are provided carbon credits to put a ceiling on their carbon emission. The countries crossing their allotted upper limits of carbon emission can buy carbon credits from countries that are utilizing a small portion of carbon credits allotted to them.
There is also the REDD PLUS (Reducing Emissions from Deforestation and Forest Degradation) strategy. In this project, communities which cut forests for their livelihood are paid to save them instead. There is a proper mechanism to measure the stored carbon in a tree’s trunk so local communities are paid money according to the stored carbon. It provides incentives to communities to save forests rather than causing more deforestation.
Similarly, the Paris Agreement also revolved around creating the International Green Climate Fund in which developed nations which have played a bigger role in CC will support developing nations financially to increase their capacity for mitigation and adaptation.
Another concept being introduced in the global CC market is climate insurance, which involves insuring infrastructure against CC related disasters. There are many financial aspects related to adaptation efforts to deal with climate change disasters. Experts are emphasizing on CC resilient crops which offer greater yields than conventional cash crops. Significant amounts of money are being invested to organize workshops, seminars and awareness campaigns to create public awareness about these crops. A large number of people migrate from CC disaster prone areas and rehabilitate at new places. This also an additional financial element in the CC economy. Every year the ‘Conference of Parties’ is arranged in the world’s biggest cities in which thousands of people participate, including head of states, diplomats, government officials, representatives of non-governmental organizations and the business community. These delegates spend millions to participate in this conference in which the host country earns billions of dollars.
The writer is based in Islamabad and works on environmental issues. She can be reached at [email protected] twitter account is @zilehumma_1
Published in Daily Times, February 24th 2018.