TO: The Senior Manager




RE: Human-Induced Climate and the Economy Briefing Paper

ISSUE: This briefing will address the effects of human-induced climate change on the economy. Climatic change has negatively affected the economy yet economists refuse to take adequate action to reduce the negative impacts. Climate change affects the economy by reducing world food production and disrupting transport through damage to infrastructure such as roads, railway lines and airports. Additionally, climate change causes illness and death, which in turn depletes the labor market of a skilled workforce.

In recent history, climate change has been evidenced by a rise in sea levels, increased occurrence of hurricanes, wildfires, warming oceans and a rise in global temperatures. Climate change mitigation should therefore be intensified in order to control the severe negative impact it may cause to the world’s economy.

CURRENT SITUATION: Economic activities such as agriculture and the use of fossil fuels have been instrumental in determining the extent at which humans use the environment. Unfortunately, people are realizing the consequences of their actions when it is too late to prevent some of the damages caused. The extraction and use and burning of fossil fuels have contributed to the greenhouse effect, which is a major cause of global warming. The use of fertilizers in farming and clearing forest land for agriculture have added to the levels of carbon dioxide in the atmosphere, since there are no trees to capture the carbon that is released. These actions have over time contributed to global climatic change. Reversing the effects of these actions is an economic issue since some of the banned products will lead to job losses. Other products being developed are more energy efficient and some have led to the development of new technologies.


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 The effects of climatic change will be felt for a long time even after introducing different incentives to minimize and stop the damage that have already been caused. People will tend to give up practicing some of the policies when they do not see any significant short-term changes. Developed countries are the major emitters of carbon emissions yet the effect of these emissions are felt in developing countries.


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Determining responsibility is not easy despite various environmental conferences held. Some countries do not have clear guidelines and practical solutions on how to deal with climate change while others find it hard to implement the changes.

PROPOSED ACTION: Economic policies aimed at reducing the effects of greenhouse emissions have been put in place. They include shifting towards economic activities that reduce the level of greenhouse gases produced into the atmosphere. There are also policies aimed at using energy-efficient technologies that emit lower levels of carbon dioxide. Others include implementing carbon taxes whereby consumers are levied per the amount of carbon dioxide emitted. Reducing trade barriers on products that are more environmentally friendly and energy-efficient will make the goods cheaper and will provide a competitive advantage (OECD, 2008). One of the economic policies that facilitate efficient adaptation is shore protection to prevent the sea level rises from eroding beaches and damaging property. It is however challenging to design climate change policies because of it is difficult to predict and therefore it may not always be possible to implement preventative measures. Additionally, mitigating climate change is costly.

SUMMARY: In the development of these policies, it has been noted that many industries suffer because they cannot afford some of the proposed changes. Economics can contribute to designing these policies because it can help create a more feasible option. The higher prices that have been introduced in the energy sectors of most countries have contributed to the higher prices of goods because of the increased cost of production. On the other hand, this has led to the innovation of many products and the use of products that are safer to the environment.





OECD (2008). Organization for economic co-operation and development. Retrieved from <>


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