Climate change is a global concern, and if you're American, there's no avoiding talk of climate change in the news media or daily life. It's everywhere. We all know it's a problem for our lifestyles, but what's the potential impact it can have on the American economy?
What is Climate Change Really Costing Us?
Recently, 13 U.S. government agencies operating under congressional mandate released the fourth National Climate Assessment to tackle the realities of climate change. Among the things related to climate change, the study reports extreme swings in weather. These shifts affect more than just our comfort levels and can cause infrastructure damage, a hostile ecosystem, and economic equality that will be particularly impactful to vulnerable populations.
In addition to this information, they uncovered the impacts of climate change exist at an intersection. That is, they all share interconnectedness and relativity to one another. One largely impacted facet of society is sure to be the American economy. Here's what researchers say you should expect to pay for:
- Significant damage to "critical infrastructure and property, labor productivity, and the vitality of our communities"
- Anemia in industries that require favorable climates to perform certain essential duties like agriculture, tourism, and fisheries
- Increased energy demands resulting in higher bills for electric utilities
- Impact on imports and exports as those we trade with also struggle to mitigate the impact of climate change
The report finds if we don't take measures to adapt and change to the effects of climate change, we should expect it to be a financially costly endeavor, not to mention one that gravely impacts our environment and way of life over the next century.
International Bailout: A Possible Solution
A recent study by Bloomberg New Energy Finance found that offering below market-rate loans to developing nations for the purpose of building infrastructure around wind, solar, and zero-carbon energy solutions may be a potential way to curb the detrimental impact of climate change. We've seen this strategy be effective before in times of peril, as this is not too different from how the U.S. bailed out the automotive industry in 2008. It's also reminiscent of government-issued student loans, which tend to be easier to get and overall cheaper for the consumer than other types of traditional loans. So what's the idea? Here it is in a nutshell:
In the words of Bloomberg from a recent press release, "Pairing clean energy with affordable, flexible financing can make infrastructure like wind or solar power more cost-competitive, even more so than fossil-fuel sources."
Central to this concept is the notion that developed nations have more funds and resources to curb greenhouse gas emissions on their own, and just about every developed nation is already working on initiatives to do just that. However, developing nations struggle and compete for existing resources and are more likely to produce greenhouse gas emissions as a result. By making financing for new energy sources available to these countries, they can stimulate their own economies while achieving positive steps toward slowing the effects of climate change.
A key factor in this plan is to make clean energy cheaper for all nations. At the point clean energy becomes less expensive than burning coal or using other fossil fuels, the report says, developing nations will be more likely to use it. Concessional loans are one way that this can occur within the next 5 or 10 years.
Regardless of what the answer to climate change ends up being, it's clear that we need one sooner or later. According to the 1,600-plus page report issued at the end of 2018, climate change is a matter of life and death in the century to come. If we want future generations to inherit a viable planet, we need more ideas like this one in order to reverse its effects. That may require more of the great minds in finance to work cooperatively with world governments to engineer a solution that's good for the global economy and all of the people in it.