Ev o lvi n g Co m par at ive Advantages and the Impac ts of E xtr em e Weat he r Eve nt s
While facing immense adaptation challenges, substantial new opportunities will arise for countries to diversify their exports in a global, low-carbon economy. The challenges relate to the unavoidable changes in long-standing comparative advantages, while new opportunities will arise from the application of new, lowcarbon technologies that will allow countries to exploit their own carbon competitiveness. This phenomenon is already apparent for environmentally preferable products,2 for example, but it will require lower tariffs and fewer regulatory barriers in importing countries and investments in the capacity to trade and verify carbon footprints.
The impact of a changing climate on comparative advantages Climate change will manifest itself mainly in higher temperatures, pluvial and river floods, sea-level rise, melting ice caps, and other weather-related conditions—all having a direct impact on how and what kinds of goods and services are traded. These impacts will, in turn, have implications for the pattern of global investment and may lead to substantial changes in migration patterns.3 The impacts on the agriculture sector are the most obvious. Regions currently producing and exporting a particular crop may lose their comparative advantage at higher temperatures, which are likely to result in lower yields, while other, currently colder regions may gain a comparative advantage in that crop. Additional, indirect effects may result, such as an increase in the prevalence of plant and animal pests as well as a rise in the incidence of diseases that lower yields. Unfortunately, while strategies for controlling and eliminating these pathogens may exist, trade restrictions may hamper their availability. Climate change will also affect other export activities of importance, such as services that are offered primarily outside or through travel, especially tourism. Tourism is a key source of revenue and jobs in many low- and middle-income countries. The sector is both highly vulnerable to climate change and a major actor in exacerbating greenhouse gas emissions through, for example, its impact on demand for air travel. The tourism sector is especially vulnerable to climate change in Africa, the Middle East, South Asia, and the small island developing states, typically in countries where tourism accounts for the largest share of gross domestic product (GDP) and regions where tourism is expected to grow strongly. Hence, climate change will increasing undermine tourism’s role in driving development and poverty reduction in these vulnerable countries (Scott, Hall, and Gössling 2019, among others). Nonetheless, there are ways to facilitate the development of sustainable and resilient tourism. Gössling and Higham (2021) suggest that significant opportunities exist for low- and middle-income economies. Specifically, for hotels and accommodation businesses, it is always economically feasible to reduce energy use (20 percent at zero investment). Destinations could also develop optimization models focused on closer extended-length-of-stay, all-year tourism. They propose a high-value, low-carbon, resilient tourism “destination model for the future” that is centered on reducing leakage, lowering carbon, and adding value. Throughout the sector, a best practice would be for all tourism stakeholders to support and lobby for low-carbon policies, including carbon dioxide (CO2) taxes (“environmental fees”). The public sector also has a key role to play, particularly to incentivize sustainability. For example, in Sri Lanka, new tourism investments should follow sustainable guidelines.
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