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Environmental Economics

Environmental economics as a discipline concerns itself with environmental matters and phenomena and how they interact with the economics, either of a particular area or the global economy. In recent years global warming as a phenomenon has been increasing becoming a thing of great concern in the world. This is a phenomenon where the temperatures of the earth’s atmosphere rise consistently above normal causing a lot of changes in global climate. This is because its residual effects and impact on many spheres of life are quite significant.  This paper examines the effect of global warming and its effect and potential effects on economies around the world. It also proposes several solutions in policy to mitigate the effects of global warming as well as to reverse the situation that cause the same.

Global Warming

The intergovernmental panel on Climate Change (IPCC), an organization created to study climate change discovered that Global Warming is the increase in the average temperature of the atmosphere, oceans, and landmasses of Earth (Mathez 7). At present the earth is facing a rapid warming, which most scientists believe results, at least in part, from human activities. The chief cause of this warming is thought to be the burning of fossil fuels, such as coal, oil, and natural gas, which releases into the atmosphere carbon dioxide and other substances known as greenhouse gases which are chiefly produced by human activities (Fuchs 6). As the atmosphere becomes richer in these gases, it becomes a better insulator, retaining more of the heat provided to the planet by the Sun (Mathez 9).Temperatures on the surface of the planet then become higher. Deforestation is also a big causative factor in global warming as it robs the environment of the trees that mainly regulate amounts of carbon dioxide released to the atmosphere. The major greenhouse gases are; water vapor, carbon dioxide, methane, nitrous oxide and among the major effects of global warming on the earth is the global climatic change that it brings with it. The overall raised temperatures on the earth’s atmosphere interfere with set climatic systems that operate within certain regions. This climate change has brought drastic changes in seasons and climate patterns in different areas.

Global warming exerts its effects on the earth through the alteration of global climatic conditions. Changes in climate consequently lead to changes in weather patterns in different places, including changes in amount and types of precipitation. Higher temperatures on the surface of the planet have the effect of melted polar glaciers, permafrost and sea ice. This has resulted in a rise in sea levels. In other areas it has resulted in the expansion of subtropical deserts (Mathez 10).

Global warming has brought about the increased occurrence of extreme weather situations and event such as heat waves, intense cold waves, hurricanes, tsunamis, flooding and the occurrence of El Niño phenomena. The European heat waves as well as hurricane Katrina were largely the result of global warming (Mathez 10).

Climatic change as a result of increased temperatures on the planet has had an effect on living organisms. Some of these effects include the destruction or loss of habitats for some of them, such as the bacteria that live in glacial regions. Loss of habitat has result in species depletion and extinction in some extreme cases.

Changing climate and altered weather patterns have directly resulted in reduced agricultural yields across different parts of the world. This has resulted in threat to food security in some regions. In developing countries, this has led to increased challenges in feeding their populations (Fuchs 16 ).Cases of starvation in parts of East and Central Africa have been severe and have led to numerous fatalities (Mathez 46).

Changing climates have had an impact on the health on different individuals as they try and adapt to new climates. It has also resulted in the breeding of different kinds of virus in places where they did not exist. This has led to an increased risk of diseases and has thus decreased productivity and led to higher costs in health (Fuchs 21).

An Analysis of Economic Effects Global warming

The effect s of global warming on the environment has significant ripple effect s on people and economies. These effect scan be felt both at a macroeconomic and a microeconomic level. Effects are almost always felt by all stakeholders involved as costs and implications are often passed down production chains to the last consumer. There several major economic factors brought about by global warming.

Decreased Agricultural Yields

Change in climatic patterns has had a significant impact on plants in areas where these changes have been experienced in many cases. It has lead to decreased yields in agricultural produce due to unfavorable weather patterns. Farmers in many regions globally have encountered numerous challenges due to complications brought about by the changing weather patterns. In Parts of Africa and Asia altered weather patterns have made it almost impossible to harvest good crop yields. The new and erratic weather patterns have led to big losses for farmers (Fuchs 16).Decreased agricultural yield at a microeconomics level has had a negative effect on farmers’ livelihoods and food supply, and has decreased and has sent the local food prices souring. At a macroeconomic level, entre countries have had to deal with national food shortages, a thing that has negative national budgetary implications. This is because countries are forced to import food they would have otherwise produced internally. It has also compromised local and national industries whose raw materials come from agricultural yields. Decreased food production has led to decreased productivity of populations, especially in developing countries where food reserve are not sufficient to feed the entire populations in some countries. This is because if workers are undernourished they generally become less productive.

Scarcity of Agricultural products that are non-food in nature , or that serve other purposes such as acting as raw materials for other industries have led to increase in prices of those products. This has had the residual effect of denying income to farmers, governments and compromising the industries that deal with these materials.

Effect on Commerce

Compromised agricultural yields create increased demand for those good and this leads to an increase in prices. Consistently high prices in goods reduce consumer buyer power and this has a negative effect on commerce and business enterprises. The government in such a scenario suffers loss of taxable income from businesses, most of who make little or no profit. Strained buyer power also has the effect of making it difficult to create and run enterprises. Insufficient yields deny the government that it would have made through the export of surplus produce. In Many times, importation of extra food costs the government . 

Unemployment and loss of livelihoods

Global warming effects have an impact on various economic sectors and activities. The compromising of these activities in one way or another many times directly impacts on people’s livelihoods and sometimes leads to a loss of the same. Strained industries have to either lay off some of their workers or reduce their pay in an effort to keep afloat. This increased numbers of lack of jobs creates a strain on national economies.


Global climate change has in some cases led to loss of national income in form of foreign exchange from the tourism industry. The changing climatic conditions lead to unwillingness of people to travel to certain destinations either due to change in their traditional attractive climate, or due o perceived danger as a result of erratic weather patterns.

Extreme-Weather Events

The upsetting of weather patterns by global warming has resulted in the increased occurrence of extreme weather events such as unexpected floods, droughts, hurricanes, heat waves, tornados, tsunamis and El Niño phenomena .In India and much of Asia for instance, global warming has caused increased incidence of flooding and extreme monsoon rainfalls (Fuchs, 10). These many times cause massive destruction of property and many times led to many fatalities. They therefore come with a lot of financial implications both for individuals and governments in damaged property and infrastructure.

Economic effects of Loss of Habitats

The temporary or permanent loss of habitats for some living organisms can have economic implications to an area or a country if that loss affects certain economic activities. Raised oceanic temperatures as well as acidification of water bodies due to global warming, in some places has resulted to the death of certain species of fish. Polar bear populations in parts of the Polar Regions have been declining since the onset of global warming. This is because of the effect the climate has on their habitat and their food sources (Fuchs, 20). In such cases economic activities that depend on those fish have greatly suffered. In extreme cases entire species become extinct as a result of loss of habitat or inability to survive in altered temperatures. In Kenya for instance global warming has led to an increase in insects and parasites such as mosquitos, leading to numerous cases of malaria (Mathez 46).

Mitigation strategies

Correcting problems that result from global warming must address its causative factors. There are a number of solutions that may be explored in a bid to try and slow down, stop or even reverse global warming. These include a combination of economic, political, social and technological approaches and must involve all stakeholders.

Reducing Green House Gas Emissions

It is imperative that those factors that have led to the development of global warming be stopped or reduced. This mainly includes reducing activities that result in the production of green house gases. Since green house gases are majorly produced by the burning of fossil fuels, the n the first step in combating global warming must involve decreasing significantly the burning of fossil fuels. This will ensure that minimum amounts of green house gases are put into the atmosphere.

The transport industry is another major source of greenhouses gases especially carbon dioxide. These are emitted either by transportation machinery such as vehicles, planes and marine vessels or as by-products during the process of mining for fuels. A reduction of this may be done by choosing to focus on use of more efficient vehicles that emit less carbon dioxide into the atmosphere. Emphasis should also be made on popularizing clean energy transportation methods and machinery, such as electricity powered vehicles.

On a personal level, individuals can reduce the amount of green house gases they release into the atmosphere by reducing the amount of waste they generate, this waste has to be eventually burnt, which releases green house gases into the atmosphere. Individuals should focus on recycling of materials as opposed to disposable ones.

It is also possible to naturally clean the atmosphere of carbon dioxide which is a major green house gas. This can be done through afforestation on a large scale. The numerous amounts of plants and trees take in the gases for photosynthesis, thus removing it from the atmosphere. This process is referred to as natural sequestering.

Climate engineering Technology may also be used to clean out green house gases from the atmosphere. This process is an artificial form of sequestering that involves capture of carbon from the atmosphere and recycling of the same into a useful energy source.  Still other technologies may be able to reduce the amount of heat that reaches the planet by deflecting, through the use of massive reflectors, o the sun’s light rays from the earth. This could be done by positioning large concave reflectors into orbit around the earth. The technology to undertake both these projects are still under testing and discussion phases (Mathez 32).  

Technology that provides alternative forms of energy, as opposed to carbon fuels would also go a long way towards reducing the amounts of carbon emissions in to the atmosphere. This is because carbon emissions happen both at the mining and refining of those oils as well as engine by products in motor vehicles. The use of clean sources of energy such as solar energy, wind energy, hydro energy and nuclear energy

National policy and legislation may be enacted in support of afforestation activities as well as practices that support reduction of green house gases emissions. Governments should provide incentives, such as rewards for those individuals or corporate institutions that are proactive towards reducing green house gas emissions.

Internationally, countries should continue to work together to ensure that emissions of green house gases are kept at a minimal. The awarding of carbon credits for those countries with the least amount of carbon released into the atmosphere is an example of an initiative that encourages reduction of carbon dioxide emissions.


The far reaching effect of global warming cannot be ignored. Left unattended it would interfere with almost all established natural environmental systems on the planet. It is imperative that mitigation strategies implemented by all stake holders involved. Action to reduce global warming should be done both at individual level as well as at national and international levels. It is only a unified effort where all stakeholders contribute and play their part that there can be hope of slowing down, stopping or even reversing global warming.

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