ECONOMICS OF

CLIMATE CHANGE

Dr.C.MUTHURAJA, M.A, M.Phil, PhD

DEAN & ASSOCIATE PFOFESSOR OF ECONOMICS

THE AMERICAN COLLEGE

MADURAI – 625 002, TAMILNADU(Coordinator, Students Productivity Club, Madurai Productivity Council)

Email: cmuthuraja@gmail.com (M-094863 73765)

(Presented in UGC National Seminar on Climate Change at Saraswathi Narayanan College, Madurai on 19.03.2015)

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CONTENTS♦ INTRODUCTION♦ IMPORTANCE♦ MDG - EQUALITY-CLIMATE CHANGE ♦ ASIAN EXPERIENCE♦ ECONOMICS OF CLIMATE CHANGE:

ISSUES♦ CLIMATE CHANGE: NEGATIVE/

POSITIVE IMPACTS♦ SUMMARY AND SUGGESTIONS

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CLIMATE CHANGE

W H A T? W H Y? W H E N? W H E R E? W H O (M)? & H O W?

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ECONOMICS OF CLIMATE CHANGE: ISSUES

♦ Climate Change & Economic Growth♦ Climate Change & Agriculture♦ Climate Change & Industry♦ Climate Change & Service Sector♦ Climate Change & Trade♦ Climate Change & Employment♦ Climate Change & Productivity♦ Climate Change & Gender♦ Climate Change & Human Life♦ Climate Change & Environment SINCE 1881

Global Climate Change

♦ The prospect of global climate change has emerged as a major scientific and public policy issue

♦ Poses a threat to the well-being of humans and other living things through impacts on ecosystem functioning, biodiversity, capital productivity, and human health

♦ Resources for the Future

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Damages and Mitigation Benefits

♦ Climate Change Damages and Mitigation Benefits

♦ potential consequences of climate change include ♦ increased average temperatures♦ greater frequency of extreme temperature events♦ altered precipitation patterns, and ♦ sea level rise♦ biophysical changes affect human welfare ♦ market and non-market damages

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Market Damages

♦ Market damages are the welfare impacts stemming from changes in prices or quantities of marketed goods

♦ Changes in productivity typically underlie these impacts

♦ Applied in other industries, including forestry, energy services, water utilities, and coastal flooding from sea level rise applied in other industries, including forestry, energy services, water utilities, and coastal flooding from sea level rise

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Non-Market Damages

Non-market damages include The direct utility loss stemming from a less

hospitable climate as well as welfare costs attributable to lost

ecosystem services or lost biodiversity The loss of biodiversity, for example, does not

have any obvious connection with price changes or observable demands

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Cost Assessment

♦ The costs of avoiding emissions of carbon dioxide, the principal greenhouse gas, depend on substitution possibilities on several margins

♦ The ability to substitute across different fuels ♦ To substitute away from energy in general in

production; and to shift away from energy-intensive goods

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Integrated Assessment

♦ Link greenhouse gas emissions, greenhouse gas concentrations, and changes in temperature or precipitation, and they consider how these changes feed back on production and utility

♦ Optimization models that solve for the emissions time-path that maximizes net benefits, in some cases under constraints on temperature or concentration

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Fiscal Impacts and Instrument Choice

♦ Interactions with the tax system and the potential for policies such as carbon taxes and auctioned permits to generate revenues

♦ Carbon taxes and auctioned permit programs that employ their revenues this way will lower the excess burden from prior taxes, giving them a significant cost advantage

♦ Subsidies to emissions reductions or to new, “clean” technologies will have a cost disadvantage associated with the need to raise distortionary taxes to finance these policies

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Climate change: Negative/ Positive Impacts

♦ Water resources Decreased availability in many water scarce regions

♦ Increased availability in some water scarce regions♦ Reduced crop yields in most tropical and subtropical

regions, and in mid latitudes for strong warming♦ Increased crop yields in some mid latitude regions for low

to moderate warming♦ Potential increase in timber supply from appropriately

managed forests♦ Fisheries Decreases in commercial (mainly cold water)

fish stocks in some areas♦ Reduced energy demands for space heating in mid and

high latitudesSINCE 1881

Climate change: Negative/ Positive Impacts

♦ Human settlements, energy and industry Widespread increased risk of flooding, landslides and avalanches

♦ Increased energy demand for space cooling in low and mid latitudes

♦ Decreased hydro power potential and waterway transport capacity in areas with lower water availability and decreased glaciers areas

♦ Increased hydro power and waterway transport capacity potential in areas with higher water availability

♦ Increased number of people exposed to vector- and water-borne diseases

♦ Reduced mortality in mid and high latitudes in winter

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Policy Initiatives and Coordination

♦ International : United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol (first significant international effort to reduce greenhouse gas emissions)

♦ National /Government: Policies & Programs, Tax, Subsidies +++

♦ Corporate Efforts♦ Non-Governmental Organizations♦ Public/Household Level♦ Individual

ME &YOU SINCE 1881

APPEAL TOWARDS

Clean India -Green India-Lean India/World

CLIMATE CHANGE EDUCATIONPLEASE

EACH ONE TEACH ONE

IF NOT

EACH ONE CATCH ONE AND TEACH ONESINCE 1881

?????????♦ QUESTIONS

♦ DOUBTS

♦ CLARIFICATIONS

♦ REMARKS (IF ANY)

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THANKING YOU?SINCE 1881