Impact Of Economic Growth On The Environment – Abstract: Climate change will radically change the way poor countries pursue economic development – ​​with ramifications for national development strategies, the field of global development and the shape of international security.

This essay explores how climate change is changing the pursuit of economic development: the transformation of poor economies and their people into prosperous ones.

Impact Of Economic Growth On The Environment

This is hardly the first attempt to combine the climate agenda with that of economic development. The UN’s Sustainable Development Goals are important in setting a dual agenda where development goals for people and the planet sit side by side in a unifying framework.

How Can We Balance Economic Development And Environmental Protection?

Many comments focus on the compatibility of the two plans. A radical and visionary view places progress on climate change and economic development as strict proxies, and calls for nothing less than the unraveling of economic development to save the planet.

Cooler heads instead point to their complementarities: the critical role of economic development in supporting adaptation and the recognition that investments in the green transition will drive economies rather than sacrifice living standards.

In contrast, this essay assumes as its point of departure that the goals and significance of economic development are immutable. The question posed here is

The demand for economic development is changing in a world gripped by a changing climate. The essay argues that climate change will require three major changes: a reassessment of the causes and prospects for development, a rebirth of transition economics, and a reformulation of the problem that development is trying to solve. The final section asks what these changes might mean for international security and for the community of national and global actors who shape policy and strategy in this area.

Technological Impact On Business Environment

Why are some countries richer or poorer than others? This is the motivating question at the heart of the study of development economics.

A rich literature seeks to identify the “deep determinants” that best explain comparative economic performance in the long run. This search is increasingly reduced to a focus on geography and institutions.

A country’s geography affects its economy through multiple channels, including agricultural productivity, disease vectors, and proximity to markets. A country’s institutions, defined here as the rules and norms that govern society—including those imposed by external actors—affect the incentives people face to engage individually or collectively in productive activity. Which of the two factors is dominant cannot be definitively decided empirically, so it is partly a matter of opinion. However, the majority opinion and the weight of the evidence support the institutions.

Recent research, focusing specifically on the effects of climate change on average temperatures, points in this direction. Temperature has been found to affect incomes through agricultural yields, workers’ physical and cognitive performance, energy demand, and the prevalence of crime, disorder, and conflict. By some accounts, in the second half of the twentieth century, an average temperature increase of 1°C in a given country and year caused per capita income to fall by an average of 1.4 percent.

Solution: Industrial Impact On Economic Growth And The Environment

Crucially, the effect persists after the temperature shock is over, thereby affecting the country’s economic performance over time.

Thus, while global warming may lead to greater economic productivity for countries with low average annual temperatures, rising temperatures portend increasingly dramatic declines in productivity in countries with already warm climates.

These studies suggest that future analyzes of the deep determinants of economic performance could uncover a greater role for geography, with geography proving particularly important in determining the economic health of countries during the current and future eras of climate change. They also show that the economic outlook for today’s poor countries will worsen disproportionately because these countries start with warmer temperatures on average and are projected to record particularly large temperature increases (see Figure 1).

The impact of climate change on economic performance will not be limited to its effect on average temperatures. Other extreme weather events, such as droughts and fires, as well as changes in sea level, appear to be just as, if not more, relevant.

Pdf) Environmental Quality: Impact Of Economic Growth

One way to think about these effects is to consider how extreme weather events will shape “growth episodes.” Economic performance in the medium to long term is episodic in nature for all but the richest countries that remain on the technological frontier.

Virtually all countries have experienced periods of rapid economic growth and periods of low growth. The comparative performance is explained by the superior ability of some countries to sustain growth; poor countries have a greater tendency to reverse.

In other words, shocks and how they are managed play a large role in explaining comparative economic performance.

If climate change portends a world of more frequent and intense shocks, sustained episodes of rapid economic growth—so-called growth miracles—will become harder to achieve. The result will be fewer poor countries that manage to approach the income levels of rich countries than in a world without climate change. This comes at a time when convergence has become more common since the beginning of the twenty-first century.

Economic Growth: Another Big Threat To The Environment

The weaker prospects for economic convergence are exacerbated by the weak institutions that characterize today’s poorest countries. Institutional weakness is associated with deeper growth slowdowns, meaning that poor countries face a more difficult path to recovery after any given shock.

One countervailing factor that could boost the economic fortunes of poor countries is the long-term possibility of ubiquitous and abundant energy, assuming the marginal cost of renewable electricity continues to fall. This would reduce the cost of doing business in poor economies, not to mention materially improve the lives of their people. Such an outcome depends on investment in renewable infrastructure and access to renewable technology by developing countries.

Every country today faces the challenge of undertaking a green transition: moving to a zero-carbon economy with its far-reaching implications and demands on land, planning, infrastructure, investment, technology, jobs and social justice. The accompanying disruption will play out in the coming decades, in addition to the devastating effects of a changing climate.

For the minority of countries whose economies are organized around the extraction of fossil fuels, a more fundamental overhaul is needed. There are twenty-one economies for which coal, oil, and natural gas account for the majority of merchandise exports; in six of these countries, fossil fuels account for more than 90 percent of these exports (see Figure 2).

Pdf) The Effect Of Climate Change On Economic Growth: Evidence From Sub Saharan Africa

Even in a world where non-renewable energy production continues, the economic models of these countries will require reinvention. This will emerge as a central economic development project in the coming years.

Here, transition economics, which describes the metamorphosis of dozens of economies from a centrally planned to a market-based system in the late twentieth century, offers both a partial analogy and a handbook.

Central to this analogy is the expectation of a drastic drop in income. For the countries of the former Soviet Union, economic contractions ranged from 10 to 50 percent in the early years of transition, marking a period of painful adjustment with social, political, and psychological dimensions.

A decline in output of a similar order can be expected for the twenty-one fossil fuel exporting economies, albeit spread over a longer time horizon.

Beyond Gdp: Making Nature Count In The Shift To Sustainability

Fossil fuel exporters can also be expected to undertake some of the same reforms required of transition economies. This involves redefining the role of the state in the economy, from serving as a source of growth and rent capture through state-owned enterprises to an enabling role that includes greater liberalization, including by removing price controls and subsidies related to the energy sector. Among fossil fuel-exporting economies, an average of 3 percent of annual income is devoted to pre-tax fuel subsidies, compared with less than 1 percent in all other countries; in Libya, this share is an astonishing 17.5 percent.

Taken together with the expected decline in incomes, these reforms mean the need to recalibrate the social minimum to an affordable level and redefine the social contract.

Such reforms are hardly easy. Indeed, the process of economic transition has proven to be a humbling experience for the economics profession.

The prevailing wisdom that faster policy adjustment is better has been challenged by the relative success of more gradual reforms in East Asia, as opposed to the Big Bang approach advocated and adopted in Eastern Europe. The slow recovery from transition in many countries has prompted analysts to place greater emphasis on the importance of institution-building in supporting economic development – ​​although the lack of a practical set of policies to support institution-building is telling. The coming transition for fossil fuel exporters is likely to lead to a similarly frightening and ill-marked course.

Human Footprint Surprisingly Outpaced By Popu

As fossil fuel exporters reduce their reliance on non-renewable natural resources to boost their economies and generate export revenue, a new generation of countries is poised to take their place: those endowed with significant natural wealth in precious minerals and metals that are fundamental to renewable energy production, transmission and storage.

Extractive industries present compelling opportunities for revenue generation as well as inevitable management challenges. The stakes are raised when the natural resource in question is easily transported and truly scarce, and therefore capable of yielding large economic rents, as was the case with oil. Such resources can become a huge geo-economic power or leave countries affected by the resource curse.

On the surface this

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