February 2011
We Introduce
Climate Change and Global Warming Over recent decades, the seriousness of the climate change issue and the consequences it presents have become key factors concerning future social and economic growth, and development. There is no longer any dilemma about whether climate change exists or not. The question now concerns the extent to which its effects »are felt« and, more specifically, to try to assess its future impact on overall growth and development potential. We are witnesses to the fact that climate change is being manifested through frequent floods, droughts and fires all over the world. Consequently we will inevitably face a rise in sea-level, a melting of ice and snow, an increase in air and ocean temperatures, and changes in flora and fauna, etc. These occurrences will have a great influence on many aspects of economic, social and environmental systems. This is one of the main reasons that climate change is a subject of concern, not only for meteorologists, climatologists, and environmentalists, but also for other scientists and, of course, for economists.
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An increase in global air temperature is one of the most critical problems faced in the 21st century – a problem that causes climate change and which could either reduce or annul the levels of social and economic development that have been attained, and destroy the efforts of underdeveloped countries in achieving their long awaited progress. Over the last 100 years, an increase of 0.7°C on average has been recorded in global air temperature, while in Europe an increase of 1°C has been recorded. The effects of this have already become apparent, and the consequential damage can be quantified in terms of billions of dollars, with an ever increasing growth rate. Climate change or global warming is caused by the accumulation of greenhouse gases (GHG) in the atmosphere. Carbon-dioxide (CO2) contributes the most to the creation of this effect which occurs as a result of fossil fuels being burned. This is the result of human activity and industrial processes. In relation to pre-industrial levels, the concentration of greenhouse gases has increased by about 55%, showing a rate of increase that suggests that it will have doubled by 2050. The most modern models of computer climate simulation estimate that the doubled concentration of CO2 would cause an increase in global temperature somewhere in the range between 1.5°C and 5°C, and in Europe possibly as much as between 2°C and 6.3°C. Further demographic and economic growth in the first group of developing countries would contribute to an increase in the level of greenhouse gases. This would, in turn, increase the risk of climate change and other irreversible consequences.
In order to minimize the influence of the situation outlined above, it is necessary to define a threshold (limit) for dangerous climate change: for example, an increase in the average global air temperature to 20°C above the pre-industrial level of 450ppm as a goal to stabilize atmospheric concentrations of carbon dioxide. Achieving such a goal would cost about 1.6% of the average world GDP by 2030. Developed countries, on average, contribute 80% to total greenhouse gas emissions. The cost of global air temperature would increase from 20C to 2.50C will in largest percentage be distributed through the poorest countries. Thus, African countries would suffer a reduction in GDP of between 1% and 9%. The least damaging reduction in GDP would be about 4% of GDP.
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The greatest challenge in facing climate change is to limit the emission of greenhouse gases in the future. Developing countries strongly object to this, because due to the emissions that the most developed countries have caused, they will need to adjust their economies which are mostly based on carbon intensive technology. A reorientation towards renewable energy sources and the application of so called ’green’ technology requires significant financial resources that may mitigate their chances for further growth and development. The latest analysis shows that to substitute fuels that create greenhouse gases could cost between 1% and 3% of the world GDP. The global character and nature of climate change requires a joint and coordinated effort. The only way that this is possible is to meet the challenges that climate change presents and to do this in an efficient and cost effective manner with the leas possible risks. Prepared by: Slavica Nikolić, MSc, CEED Consulting
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