Recently, President Trump has made some decisions on the United States' position on climate change. "Trump, who has called climate change a “hoax,” on Monday officially notified the United Nations that the United States will in 12 months leave the Paris Climate Accord, under which 195 nations agreed to reduce greenhouse gas emissions in a bid to prevent catastrophic planetary warming." With the US out of the Paris Climate Accord, who knows what will happen to the environment, and maybe even our economy.
The effects of climate change could be wider than just our planet. Many predict that by 2100, global warming could increase per capita GDP by up to 7%. It is also predicted that climate change will lower interest rates, putting a burden on the economy. "Power outages could shut down the electronic payment system, she pointed out, and increase the demand for cash — which the Fed manages. Damage from droughts and floods could come at a heavy cost to insurers or banks whose customers struggle to make payments," economist writer for the New York Times, Jeanna Smialek said.
It is essential that the Federal Reserve takes action to participate in climate-related research and practices. “It is vital for monetary policymakers to understand the nature of climate disturbances to the economy, as well as their likely persistence and breadth, in order to respond effectively,” member of the Federal board in Washington, Lael Brainard said.
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I think it is important to consider why we have allowed climate change to become so bad from an economic perspective. One reason for this is that companies who produce goods detrimental to the environment are not paying for negative externalities. For example, companies that produce plastic water bottles do not pay for the damage that plastic causes to our environment, which allows supply and demand to be greater. Perhaps if we force these companies to pay more for plastic, they will be pressed to find more eco-friendly alternatives.
ReplyDeleteI think that producers of products have allowed climate change to become such an issue due to the expenses of reducing gas emissions. Without an incentive to help the environment, producers will continue to eliminate gases in the cheapest way possible. I think it could be very helpful if there were stricter taxes imposed on firms who increase pollution in order to help our environment and give companies more reason to get rid of gases in a more environmentally friendly way. Otherwise, firms will continue eliminating gases in the cheapest way possible, and continue to harm our planet.
ReplyDeleteI actually never really thought about the economic consequences of global warming. I was only familiar with the environmental consequences, but after reading your blog, I realize now that our GDP and interest rates (among other things) may be affected. This drives the point that the US really needs to do something about changing their production habits to decrease potential environmental hazards and global warming.
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