Climate Change Impacts the Economy

Climate change is often called a foreseen catastrophe. The whole world is fighting the Covid-19 virus, but the climate change crisis has never stopped. It is time to seriously consider how sustainable human civilization will be in this crisis.

In the past, climate change was called global warming in a narrow sense, but later the term changed to the climate crisis, and recently it is even called a climate emergency. In fact, many scientists believe that climate change is closely related to human economic activity. It is not new to have heavy rain or big fires often.

Hong Jong-ho, a researcher at Seoul National University, predicted how precipitation on the Korean Peninsula would change by 2060, and applied it to the economic model to simulate how much economic damage would occur. As a result, the annual damage could reach up to 23.7 trillion won from 2020 to 2060. It is not known when such maximum damage will occur because it is random, but what is certain is that precipitation continues to increase and the damage from it increases.

Not just natural disasters, but climate change can disrupt our economic system. Natural disasters do not stop there but affect all economic activities. Whether it’s a heat wave or a drought, everything affects the amount of human economic activity. For example, international organizations predict that if the temperature rises to around 2℃ in the future than before the Industrial Revolution, global agricultural productivity could fall by up to 50%. This means that agricultural production will decrease, and that in itself implies a huge price surge and conflict. The overall industrial productivity will also fall. Wouldn’t tourism be hit, agriculture, fisheries, and construction be hit? With such omnidirectional climate change, there can be all-round damage to the industry. If the temperature rises by 2℃ and agricultural productivity drops by 50%, the economy will look completely different from what it is now. Many scientists and experts say that we can’t leave this situation unattended, and we need to make active efforts to reverse it. The starting point of this effort is a change in economic activity.

It’s paradoxical. In fact, human economic activities have led to the prosperity of human civilization since the Industrial Revolution, which results in climate change and climate change can again cause serious problems in our economic problems.

The biggest impact on climate change is carbon emissions from energy, especially fossil fuels. Carbon emissions are the biggest culprit of climate change. The problem is that carbon has no borders and no passports. This is a common problem for the entire human race because it causes environmental problems in any country or region.

For economic development, humans have no choice but to use a lot of fossil fuels, which in turn leads to carbon emissions. Is there any way to improve the economy without carbon emissions? This is the biggest concern for economists now. Until now, it was no exaggeration to say that the history of economic growth is equivalent to the history of fossil fuel use. But because continuing this condition will eventually cause climate change and adversely affect economic growth, it is now time to change the overall way economic activities operate in a more sustainable economy, such as the spread of renewable energy.

What should we do right now to secure the sustainability of our economy in such a situation? The South Korean government is pushing for a Green New Deal. It is not just South Korea’s policy, but in Europe, the green deal is a very active policy that invests 1,000 trillion won in this field for seven years.

The implication of this policy is that the energy supply system itself should be shifted from the existing fossil fuel base to renewable energy at a rapid pace. In terms of demand, efforts should be made to reduce overall energy consumption by increasing energy efficiency. Transportation, transportation, buildings, and industrial sectors need all-out efforts to use energy more efficiently. For example, normalizing electricity bills or trying to strengthen the insulation of buildings should be implemented. People point out that the economy will be hit overall in this process. At the same time, however, there is a counterargument that there are many new industries and jobs created by the energy conversion. Despite all these difficulties, the time has come for a change in policy. We have to keep in mind that if we don’t act now, we will pass on the pain and burden that our children’s generation can’t handle.


Categories: Society