Environmental economics

Assignment 1
CLIMATE CHANGE

Student name: Laiba Liaquat Khan

Instructor name: Mehwish Khalid
 Climate change refers to long-term shifts in temperatures and weather patterns. These
shifts may be natural, but since the 1800s, human activities have been the main driver
of climate change, primarily due to the burning of fossil fuels (like coal, oil and gas),
which produces heat-trapping gases.

 Pakistan is highly vulnerable to climate change due to its geographic location, high
dependence on agriculture and water resources, low adaptive capacity of its people,
and weak system of emergency preparedness.
It experiences recurring heatwaves and droughts, riverine and flash floods, landslides,
and sea storms or cyclones. Climate change is expected to increase the frequency and
intensity of these events as well as exacerbate people's vulnerabilities. Pakistan is a
low-middle income country that remains predominantly agrarian, although it is
progressively industrializing its economy and over one-third of the population now
resides in towns and cities. The country relies heavily on its climate-sensitive land,
water and forest resources for livelihoods and food security.
Lack of food security due to climate change is affecting Pakistan’s economy. Food
security is primarily related to crop production and food accessibility; both of these
elements are directly affected by climate change. Thus, climate change is a main factor
determining global, national, and regional food security. The one single event of
devastating 2010 flooding eroded away 6 percent of Pakistan’s GDP.  According to a
report that was published, changing climate will directly affect agricultural
productivity. By 2040, an increase in average temperature of 0.5 degree Celsius is
expected nationwide, with 8-10 percent loss in terms of all crops corresponding to
Pakistani Rupees 30,000 per acre.
The 2014 German Watch Index, a German-based prestigious think-tank on climate
change, reported Pakistan as among top ten most vulnerable countries in the world, and
Pakistan has been facing continuous threats and damages because of natural disasters
like earthquakes, intense heat waves, and flooding in recent years. Since 2010 to
onward, the country has had to deal with the consequences of severe flooding. Even as
recently as 2015, flood warnings have been issued in Punjab. These natural devastating
conditions are likely to cause big economic loss by destroying the infrastructure and
imposing severe impacts on food security. During past few years, Pakistan has faced
overwhelming losses due to only floods. In 2010 alone, those losses exceeded US$ 9.6
billion. Since 2010, five consecutive floods resulted in more than US$25 billion of
economic loss in damages to different sectors like agriculture, irrigation, public
infrastructure, health and educational facilities, etc. 
In conclusion, according to the Global Climate Risk Index annual report for 2020, Pakistan
has lost 0.53 percent per unit GDP, suffered economic losses worth US$ 3792.52 million
and witnessed 152 extreme weather events from 1999 to 2018.
 Climate change is a global issue and will therefore affect almost all countries including
their economies. New Climate Economics Index stress-tests how climate change will
impact 48 countries, representing 90% of world economy, and ranks their overall
climate resilience
Expected global GDP impact by 2050 under different scenarios compared to a world
without climate change:
-18% if no mitigating actions are taken (3.2°C increase);
-14% if some mitigating actions are taken (2.6°C increase);
-11% if further mitigating actions are taken (2°C increase);
-4% if Paris Agreement targets are met (below 2°C increase)

Climate change poses the biggest long-term threat to the global economy. If no mitigating
action is taken, global temperatures could rise by more than 3°C and the world economy
could shrink by 18% in the next 30 years. But the impact can be lessened if decisive action
is taken to meet the targets set in the Paris Agreement,

In a severe scenario of a 3.2°C temperature increase, China stands to lose almost one
quarter of its GDP (24%) by mid-century. The US, Canada and the UK would all see around
a 10% loss. Europe would suffer slightly more (11%), while economies such as Finland or
Switzerland are less exposed (6%) than, for example, France or Greece (13%).
In conclusions, according to sources, climate change could cut world economy by $23
trillion in 2050.