The effects of climate change to the economic stability of the US and the entire world to a certain extent are outlined in the study below, highlighting the main policies touching on the economy. Current economic success cannot be a parameter to gauge the extent of climate change but a thorough analysis of the costs incurred and likely to be incurred in the long run has been used.
Direct economic effects attributable to climate change are being experienced in the US and unless the country changes its stand on the adaptation and mitigation of the effects, future effects are projected to cause havoc to the economy. For instance, the compliance to international agreements protecting climate against carbon emissions, such as the Kyoto protocol has been highlighted.
Government policies directly or indirectly affected have been identified and duly discussed including foreign affairs, human health, disaster preparedness (extreme temperatures, precipitation, hurricanes and heat waves), industry (alternative sources of energy and preference to cheaper technologies), and treasury (carbon levy and implications to the taxpayer).
Since the onset of the industrial revolution, world developed countries have increased greenhouse gases emissions due to their reliance on fossil fuels. A shift from this trend has been identified as a solution to the effects.
Current adaptation and mitigation policies depend on practices adopted several decades ago. This implies that future effects will rely on the current mitigation measures taken. The study, therefore, explores the serious challenges facing the current and future economic base of climate change in the US than most other studies have attempted to.
Apparently, climate change poses as a greater problem that the world is facing today even more serious than the war against terrorism. Despite a huge literature on the economic implications of warming, the costs of tackling it and the role of economic policy instruments in the control of greenhouse gas emissions, economic arguments have not been to the fore in the public presentations on the issue. Many people may, therefore, be ignorant of key issues highlighted by an economic perspective for example: the close linkages between world economic performances, the man-made forces influencing climate change, and the role of technological change in reducing greenhouse gas emissions (King, 2004).
The earth’s warming-up heat comes from the sun and remains fairly constant. The earth’s average temperature is maintained by the balance between the incoming short-wave radiation and the loss of this radiation back into space. The re-radiated energy cools the earth. Energy-out balances energy-in and the earth maintains a constant global temperature. Without this balance, the earth would become steadily hotter and life would cease. Of the incoming solar radiation, roughly 30% bounces back into space from clouds, atmospheric aerosols, and bright, reflective areas of the earth’s surface, such as deserts. That leaves 70% of the incoming radiation to be absorbed, mostly by land areas and the oceans. But even this 70% cannot stay permanently absorbed, otherwise, the earth would again warm up and life would not be possible. It is re-emitted primarily as long-wave, infra-red radiation back into space. But some of this re-radiated energy is absorbed by water vapor and by “greenhouse gases” which exist in the atmosphere. Carbon dioxide is the main greenhouse gas, with its nature the major absorbing agent is water vapor. These gases increase the earth’s temperature further by +59oF (+15oC). The atmospheric concentration of carbon dioxide in the year 1000 (measured by ice core samples), concentrations were 280 ppm, and the concentrations were the same around 1800. Today’s concentrations of CO2 are about 375 ppm and it is growing at a rate of 1.5 ppm every year, a view shared by the Mauna Loa observatory in Hawaii (Weier, 2002). Longer historical records from ice cores also suggest that carbon dioxide and methane concentrations are now at their highest levels for the past 400,000 years (Houghton, 2005).
There has been a significant increase in the emissions of greenhouse gases, especially carbon dioxide and methane, since the onset of the Industrial Revolution. These greenhouse gases add to the concentrations already in the atmosphere. Moreover, they accumulate and stay in the atmosphere for decades. This is also referred to as atmospheric residence time. In fact, the greenhouse gases are upsetting the natural energy balance in such a way that the incoming energy has to be taken care of to restore the natural balance. Surface warming brings about the necessary adjustment. International agreements on climate change attempt to curb the emissions of greenhouse gases. These agreements have to be supplemented with far more telling initiatives if climate change is to be tackled in any significant way. Considerable increases in energy prices must form a fundamental part of any policy targeted at reducing carbon emissions.
Based on the scientific assertion towards climate change, and following U.S Government acceptance, it is therefore important to convey the corresponding message that the action to mitigate the effects of climate change must be serious even if unpopular.
The implication is that climate policy is about reducing impacts of climate change in the long run. Therefore, if impacts targets towards the year 2100 are to be mitigate action has to be effected now. The relationships between economic activity and emissions involve population change, economic growth rates, economic development the stages (for instance reliance on industrialization against a service-based economy), the dominant energy source within the economy and how efficient such a source is that is; the amount of energy used to produce a unit of GNP changes as economies develops, and technology status. The relationship between temperature change and economic damage depends on other additional factors: on how the economy adapts – to temperature change and its vulnerability, how swift warming is and whether there are unprecedented temperature changes and weather patterns.
When the world invests in and adopts technologies that aim at low cost emission-reduction first and the highest cost technologies last without a guarantee that the world will behave that way, such a move will not substantiate its objectives.
There are different ways to estimate direct cost. The cost associated with climate change is based on the direct costs of the technologies, such as the cost installation of an alternative power plant. This is however not the only cost, since other cost categories are involved and technology costs defy the correct concept of cost . Technology cost is measured by losses that directly affect the producer and consumer behavior once changes have been made in light of a feasible technology. Costs can change significantly, depending on how conformity policies are introduced. For example, market-based instruments, carbon taxes levied on consumer goods and tradable permits, are thought to have lower conformity costs as opposed to dictating to the emitters what technology to use. It is for this particular reason that great emphasis is being placed on the newer policies for instance the permit trading systems. It is the belief of many economists that anticipated costs will be higher than actual cost because emitters will find new technologies and the cheaper methods to overcome observance problems: climate regulation may “force” innovation. This is because; necessity is the mother of invention (Wilcoxen, 2002).