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The Economic Costs of Global Warming

The Economic Costs of Global Warming
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The potential consequences of global warming are enormous; in the decades to come, it is believed that the planet will be plagued with an increasing amount of powerful hurricanes, terrifying floods and scorching droughts. Aside from wrecking the environment, this man-made phenomenon could also prove disastrous to the world’s economy.

The Magic Number

Researchers from Stanford University and the University of California, Berkeley have found that warming temperatures could depress incomes on a global scale. By the time this century draws to a close, the study authors estimate that climate change might curb  worldwide incomes by over 20 percent.

The study reported that human productivity is closely tied to the temperatures of our surroundings. In cold-weather countries, relatively mild weather is beneficial to the economy. Temperatures that exceed a certain point, however, are usually counterproductive to economic activity. The Stanford/Berkeley team put this tipping point at 55 degrees Fahrenheit.

Location and Wealth

While warming temperatures will affect the entire globe, some nations will be hit harder than others. Specifically, the economic fallout is expected to be especially pronounced in tropical regions. Countries in these areas must already contend with high levels of heat and humidity, and human-induced climate change should only add to their economic troubles. In fact, weather trends could easily worsen income inequality in the coming century.

The researchers measured both temperatures and economic output over a fifty year span, ranging from 1960 to 2010. The economic growth (or lack thereof) of 166 countries was examined, with data from notably warm or cool years contrasted against that from years with normal temperatures.

Having established this pattern, the researchers then extrapolated it through 2100. The team’s main estimate found a 23 percent reduction in global incomes by the end of this period. Perhaps more alarmingly, the study cautioned that the actual figure could be significantly higher.

The dire predictions offered by this report far exceed forecasts from current models. Study co-author Solomon Hsiang noted that “many other researchers have projected economic impacts under future climate change. But we feel our results improve our ability to anticipate how societies in coming decades might respond to warming temperatures.”

A Fork in the Road?

If confirmed by subsequent research, this study could alter the environmental policies of major countries. It may be that carbon taxes, stricter fuel efficiency standards and other seemingly expensive measures are actually cheaper than maintaining the status quo. The Stanford/Berkeley report was published online in the journal Nature in October 2015.

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