The Impact Of Global Climate Change On The U.S Market Essay Example for Free

The Impact Of Global Climate Change On The U.S Market Essay â€Å"In the history of science, no subject has been as meticulously reviewed and debated as global warming† (Weart, Spencer cited in Doughton, Sandi 2005). Yes, it is true that climate change, commonly referred to in literatures as Global Warming has grown from an environmental issue, to moral and ethical one. Today, with the debate over the issue is continuously being placed on headlines in broadcast and print media, climate change heats up to a serious political issue and then as an inevitable economic issue. Due to economic considerations, the United States, with President Bush refused to sign in the Kyoto Treaty which compels signatory countries to reduce carbon dioxide emission. For Bush, to sign in the treaty would mean compromising the United States economy due to the fact that the compliance requirements will be too expensive and that it would â€Å"hobble the economy† (Lynch, David 2006). Europe and Japan have already adopted the Kyoto Treaty in 1997. Despite Bush’ stand on the issue of global warming, economists and business analysts have positively pointed to the benefits of climate change to the world’s economy and indeed agreed that climate change has indeed provided a sound business opportunity for specific industries. Lynch, in the March 31, 2006 online issue of the USA Today, has cited several companies that recognized the business opportunity offered by the issue on global warming. Planktos is a small Silicon Valley company developed a business idea of selling its carbon-eating phytoplankton to countries in Europe which have plans of cutting down the carbon-dioxide emission. In 2005, the company had initially made a sale of $1.3 million to Solar Energy Ltd., based in Vancouver despite the fact that the product was still at the testing stage (Taylor, Chris, 2006). Another well-established company, the General Electric Company, has also recognized the huge business opportunity for signing up in the Kyoto Treaty. GE adopted a project called â€Å"Ecomagination Initiative† which focused on developing and producing environment-friendly technologies that it sees will make a sound market share for them. As early as 1988, DuPont started to stop making use of chlorofluorocarbons in their products and had reduced its carbon dioxide emission by 72% by the year 2003. What started as an effort to address our carbon footprint has turned out to be financially a very good thing (Fisher, Linda cited in Lynch, David 2006). One more thing that has improved in today’s view of climate change is that more and more private companies have recognized the truth of global warming and that there really is the need to take action at the most immediate time possible. Lynch reported that there are already forty companies who are joining business council organized by the Pew Center on Global Climate Change, among them are IBM, Whirlpool, John Hancock and Boeing. These companies did not seem to make a significant appeal to the United States economy which currently has not so far started taking economic steps to encourage the business community to curtail or at least curb their carbon dioxide emissions. The United States government might have good reasons to do so. Setting aside examples taken by European companies, government and private U.S. sector made estimates that Kyoto Treaty would cost its economy about $125 billion to $400 billion out of its $13 trillion annual cost (The USA Today, March 31, 2007). On the issue of economic impact of climate change, the United States got an ally in the person of Sir Nicholas Stern, a former World Bank Economist. Stern estimates that at the worst case scenario, â€Å"Global warming could cut the worlds annual economic output by as much as 20%† or at least 1% of the annual economic output (BBC News, October 27, 2006).   Mercer Investment Consulting survey resulted to a 44% institutional investors agreeing that climate change is very important or somewhat important in economic terms, while 14% said it would take five years more before the issue becomes significant (The USA Today, March 31, 2007). Looking back at the issue, climate change has divided even the scientific community, the climatologists in particular, into believers and skeptics. Do the Kyoto signatories belong to the believers’ side and the United States on the skeptics’ side? What is the truth behind the issue of global warming? What is in it that made it so controversial even in the field of science? According to recent results of Time, ABC and Standard polls, the Americans 85% believe that global warming is true and is happening right now (Taylor, Chris 2006). However, in the science world, results of surveys relative to the issue generally implies that the scientific community recognizes that there the world’s climate is changing and is warming. Skepticism is however a normal part of the scientific community. â€Å"Skepticism plays an essential role in scientific research, and, far from trying to silence skeptics, science invites their contributions. So too, the global warming debate benefits from traditional scientific skepticism† (Hansen, James 1999). So when skeptics are persistent on denying the threat of global warming while others agreed, the scientific community expects it. . â€Å"Such challenges eventually strengthen our understanding of the subject, but it is a never-ending process, as answers raise more questions to be pursued in order to further refine our knowledge†, said Hansen. One well-known researcher at the University of California, Naomi Oreskes found that there is bias on the part of the skeptics especially on the issue of global warming. â€Å"Few skeptics publish in peer-reviewed journals, which check for accuracy and omissions† (Oreskes, Naomi cited in Doughton, Sandi 2005). Doughton also stressed that most skeptics get government funding for their researches which also affect the objectivity of their research results. Regardless of the presence of the skeptics, there are evidences that climate change is real and that the scientific community recognizes its occurrence and serious threat. Oreskes of the University of California found that out that 1,000 studies published between 1993 and 2003, randomly selected by Oreskes, all point to the same conclusion that people are warming the planet (Doughton, Sandi 2005). The skeptics offer alternative causes of climate change, such as natural forces that mitigate the effects of greenhouse gases, although Doughton stressed that they were not so far able to explain these well. The Intergovernmental Panel of Climate Change (IPCC), a body of reputation established by the United Nations in 1988, finally have released its official stand on the issue in 2001:   There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities (The Seattle Times, October 11, 2005).   The IPCC reviews scientific reports every five years by 2,000 scientists, by the governments of every member country and the United States is not exempted. In 2006, the United States National Center for Policy Analysis released its official statement relative to its position in the 1992 UN Global Warming Treaty held at Rio de Janeiro, which calls for the voluntary greenhouse gas emission reduction of member countries. NCPA made a cost analysis of the economic impact of the said treaty to the US economy and were summarized as follows (National Center for Policy Analysis, No. 213, September 6, 1996): Commitment to greenhouse gas emission reduction would consequently reduce US’ Gross Domestic Product y $200 billion annually. It is important to stress that the computation was based only on 10% greenhouse gas emission reduction rate based on 1990 records. The treaty would force the government to increase prices of gas by 60 cents per gallon in order to cover for the 10% reduction quota. The same also requires the government to double the price of heating oil (Burnett, Sterling 1996). The 1992 Rio commitment would cause half million Americans to lose their jobs in the next 14 years, according to the study conducted by DRI/McGraw Hill. In a separate study conducted by Constad Research Inc., 1992 Rio commitment would cause the United States to close 1.6 million job opportunities in nine years of its implementation. The above statements were made and released during the administration of Bill Clinton, who favors the Rio commitment. These could have been the same basis used by Bush who, unlike Clinton, opposed the updated version Kyoto Treaty. Even as UN member country, Bush has not yet signed into the treaty to cooperate with Japan and Europe on the effort of halting the effects of climate change. Let us consider that the technological changes in the United States economy would be expensive when it finally decided to make commitment to the Kyoto Treaty. Let us also assume that the cost analysis of the skeptics is accurate. But still, this writer believes that the cost of inaction would overturn the cost expensive cost of taking action for the US economy. This is based on the study prudently conducted by the University of Maryland, of which the results were summarized in Five Lessons as follows: Lesson 1: Economic Impacts Will Occur throughout the Country- All sectors of the economy will be negatively affected by climate change especially the agriculture, energy and transportation sectors.   The University of Maryland cited examples of forest fires which is blamed to global warming, cost California (Oakland, 1991) and the counties of San Diego and San Bernardino in 2003 over $2 billion damages. In 1997, floods in North Dakota and the Midwest in 1993 cost $1 billion and $6-8 billion in agricultural losses respectively (University of Maryland, p.3). Lesson 2: Economic Impacts Will Be Unevenly Distributed across Regions and Economic and Social Sectors – the study calculated that the maple sugar industry in the Northeast will suffer 15%-40% of revenue losses due to reduced sap flow. The dairy industry in California will suffer about $287-$982 million losses due to changes in temperature. Changes in temperature are also seen as one significant cause of the spread of pests and disease (University of Maryland, p.4). The adverse effects of the spread of spruce bark beetle which struck Alaska costs $332 million annual loss in its timber industry. Lesson 3: Negative Climate Impacts Will Outweigh Benefits for Most Economic Sectors – New York’s agricultural industry for example would be severely affected by the severe shortage of water supply especially in dry seasons wherein the Central Valley of the said state depends on their economic resources. Climate change would then expect to result in $6 billion losses. On the other hand, Texas will suffer losses up to $6.5 billion in 2030 and $10.13 billion in 2090 (University of Maryland, p.5). Lesson 4: Climate Change Will Place Immense Strain on Public Sector Budgets- due to the damages of frequent flooding and storms, the government would naturally be forced to allocate more funds for the rehabilitation of the damaged properties. Aside from this, the budget allocated for disasters or that part of the budget called calamity fund will necessarily increase as there will be more people to be rescued and relocated to safer areas. According to the calculation of the study, rise in sea levels by 20 inches in the year 2100 would require the federal government to allocate $23-$170 billion for damages in coastal properties. Increased global warming is also estimated by researchers to cost Washington State about 50% increase in fire-suppression in 2020 and over 100% increase by 2040 (p.6). Lesson 5: Secondary Effects Can Include Higher Prices, Reduced Income, Job Loss – damages in the agricultural sector would normally increase the prices of its products and therefore would be too heavy for consumers to carry. Reduced income in climate affected sectors, for example in the timber industry, in the aquaculture sector, in the amusement centers (beach resorts) would force investors and business owners to cut down on their expenses and so their employees too. More people will the lose their jobs as more and more economic sectors will be affected by the damages brought about by calamities attributable to global warming. Let us weigh things objectively. We have seen that both taking action and of non taking action would cost the United States economy significant amount of dollars. But we have seen the evidences that the cost of not taking action surpasses the costs should the US economy take action now. Technological changes to cope up with the Kyoto commitment quota are one-time investment efforts that will save millions, maybe billions of lives and trillions of properties and future revenues. The truth of the occurrence of global warming has already been well-established as well as the evidences of its adverse effects to different sectors of our society. If the US government is concerned about its economy for hesitating to sign in the Kyoto Treaty, they should seriously consider the economic opportunities taken by European companies as well as the Japanese nation over the issue.    WORKS CITED    Burnett, Sterling H (1996). US National Center for Policy Analysis. â€Å"Global Warming Treaty Costs for the U. S. Brief Analysis No. 213†. September 6, 1996. Retrieved on November 24, 2007 from http://www.ncpa.org/ba/ba213.html Doughton, Sandi (2005). â€Å"The Truth about Global Warming†. The Seattle Times, October 11, 2005. Retrieved on November 24, 2007 from http://seattletimes.nwsource.com/html/nationworld/2002549346_globewarm11.html â€Å"Global Warming Threat to Growth†. BBC News, October 27, 2006. Retrieved on November 24, 2007 from http://news.bbc.co.uk/1/hi/business/6093396.stm Hansen, James (1999). â€Å"The Global Warming Debate†. Retrieved on November 24, 2007 from http://www.giss.nasa.gov/edu/gwdebate/ Lynch, David (2006). â€Å"Corporate America warms to fight against global warming† .The USA Today, May 31, 2006. Retrieved on November 24, 2007 from http://www.usatoday.com/weather/climate/2006-05-31-business-globalwarming_x.htm Taylor, Chris (2006). â€Å"Why global warming is good for business†. CNN News Online, April 17, 2006. Retrieved on November 24, 2007 from http://money.cnn.com/2006/04/13/technology/business2_futureboy0413/index.htm University of Maryland (2007). â€Å"The US Economic Impacts of Climate Change and the Costs of Inaction†. A Review and Assessment by the Center for Integrative Environmental Research (CIER). October 2007. pp.1-7