Global warming creates an opportunity to induce the necessary changes for a better world order, and for the poor, who — with or without climate change — are otherwise tomorrow's losers, says Chilean economist Marcel Claude in this column for Tierramérica.

Illustration credit - Fabricio Vanden Broeck

Nevertheless, it is worth highlighting the economic effects of that this global phenomenon will have on human society, in order to avoid decisions that could aggravate the situation of poverty that is always present in the universal conscience.

A growing body of practical and theoretical evidence indicates that the state of the global climate has been hurt by economic expansion because since the beginning of the 18th century modern society began the massive use of fossil fuels like coal, petroleum and natural gas, which hold great quantities of carbon that is released into the atmosphere through combustion.

The scientific evidence indicates that the temperature is increasing and shows a tendency to warming by 0.6 degrees Celsius. Today we know that the current level of greenhouse gases in the atmosphere is equivalent to some 430 parts per million (ppm) of carbon dioxide, in comparison to 280 ppm estimated during the period prior to the Industrial Revolution.

The European Union calculates that by 2080 agricultural yields could fall between 1.9 and 22.4 percent in the countries of southern Europe, and predicts by then some 86,000 additional deaths per year in the European bloc as a result of the higher temperatures.

On Wall Street it is believed that if a hurricane as destructive as Andrew (1992) were to hit Miami, it would represent damages equivalent to one-third of the capital of the disaster insurance sector.

The United Nations predicts that droughts will mostly affect the malnourished population of the world, estimated to be about 830 million people, who are mostly small farmers, herders and rural laborers.

The projections for the areas of eastern Africa that rely on rains, which are already suffering drought and famine, there are potential losses of 33 percent of maize yields.

Two-hundred million people will be displaced by the rise in sea level and one-sixth of the global population is expected to disappear. In other words, one billion people. Between 15 and 40 percent of plant and animal species could disappear as well, with fish populations severely threatened in particular.

The poor people of the world will be the hardest hit, and climate change poses a serious threat to efforts to reduce poverty.

According to the German Institute for Economic Research (DIW), the natural disasters of the last 10 years have caused damages worth more than 330 billion dollars. That figure is six time higher than the total damages recorded 50 years ago, and the costs to insurers have multiplied 10-fold in that period.

The report “The Economics of Climate Change”, by Nicholas Stern, former chief economist of the World Bank, maintains that the cost of inaction would be five to 20 percent of the global gross domestic product (GDP). Climate warming would be more harmful than World War I or II, and could trigger a crisis equivalent to that of the Great Depression of 1930.

According to Stern there are four ways to reduce greenhouse gas emissions: reduce the demand for goods and services that are emissions intensive, increase energy efficiency, prevent deforestation, and utilize low-emissions technologies.

This could create new opportunities in a wide range of industries and services, given that by 2050 it is likely that it is likely that low-carbon energy markets will have a minimum value of 500 billion dollars a year or more.

Furthermore, the eradication of energy inefficiencies would open up opportunities for companies to save, would eliminate the subsidies that send erroneous economic signals and cost the world's governments some 250 billion dollars annually, in addition to reducing the costs of disease and mortality caused by air pollution.

One of the principal economic instruments that Stern proposes is establishing a price for carbon, through taxes or regulations.

In economic terms, greenhouse gases are a “negative externality”, that is, those who produce greenhouse gas emissions are contributing to climate change and imposing a not insignificant cost to the world and future generations, without having to fully confront the consequences of their actions.

Designating an appropriate price to carbon — through a tax, for example — would mean making carbon dioxide emitters pay the costs that they have been passing on to the world.

Other measures that Stern proposes are related to policies that support the development of a broad range of highly efficient, low-carbon technologies, as well as policies aimed at eliminating the barriers to changes in customs and practices, like those that impede the widespread use of renewable energies.

What is interesting is that despite the enormous costs that Stern estimates it is not a catastrophic vision, and he maintains that reducing carbon dioxide emissions now would represent a cost of just one percent GDP.

Global warming is a serious problem, but it also opens up opportunities for inducing the necessary changes for a better and safer world order, not only for the richest 10 percent of humanity, but also for the poor, who under the current circumstances, with or without climate change, are tomorrow's losers.