This document discusses the economics of climate change and contains summaries of key issues. It includes sections on the importance of climate change, its impacts on areas like agriculture and industry, economic costs and benefits of climate change impacts and mitigation efforts. The document examines market and non-market damages from climate change, approaches to assessing costs, and policy initiatives to coordinate responses at international, national and individual levels.

1. 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)
SINCE 1881

2. CONTENTS
♦ INTRODUCTION
♦ IMPORTANCE
♦ MDG - EQUALITY-CLIMATE CHANGE
♦ ASIAN EXPERIENCE
♦ ECONOMICS OF CLIMATE CHANGE:
ISSUES
♦ CLIMATE CHANGE: NEGATIVE/
POSITIVE IMPACTS
♦ SUMMARY AND SUGGESTIONS
SINCE 1881

3. 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?
SINCE 1881

4. 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 & EnvironmentSINCE 1881

5. 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
SINCE 1881

6. 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
SINCE 1881

7. 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
SINCE 1881

8. 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
SINCE 1881

9. 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
SINCE 1881

10. 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
SINCE 1881

11. 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 policiesSINCE 1881

12. 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

13. 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
SINCE 1881

14. 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

15. APPEAL TOWARDS
Clean India -Green India-Lean India/World
CLIMATE CHANGE EDUCATION
PLEASE
EACH ONE TEACH ONE
IF NOT
EACH ONE CATCH ONE AND TEACH ONE
SINCE 1881

16. ?????????
♦ QUESTIONS
♦ DOUBTS
♦ CLARIFICATIONS
♦ REMARKS (IF ANY)
SINCE 1881

17. WWW.THANKS.COM
THANKING YOU?
SINCE 1881