Some scholars such as Lomborg have shown their concern about the issue by contributing to finding a solution to it. Climate change is a shift in the weather pattern as well as related changes in the surface of the earth, oceans and ice sheets that takes place over a period of ten years or even longer. Climate change may occur due to various reasons such as natural processes, volcanoes and human influence among others. Climate change is a threat to the global economy, and being the major economic powers and contributors to the issue, the United States in cooperation with China should introduce an initiative on effective ways of solving the problem.
There are many adverse effects of environmental change on the world’s economy as we described in our illustration essay outline. First, it causes an increase in energy cost in the transition process to renewable energy (Worland 2015). Higher energy cost, in turn, leads to an increase in the level of inflation. When the global climate becomes more extreme, it is likely that the demand for energy will increase due to the need to cool buildings during summer and heat them during harsh winters (Worland 2015). While the need for energy will increase, the supply will shrink due to the lack of a real compromise to power stations as a result of higher temperatures. It is a fact that energy is the basis of most production processes that take place in the world. As a result, an increase in the cost of energy will lead to inflation, which will negatively affects the global economy.
The second effect of climate change on the global economy is the increase in the cost of insurance. The insurance industry realizes the danger of global warming. Different insurance companies have already experienced the impact of extreme weather conditions on their profit (Davenport 2014). Destruction of property by severe weather frequently made insurance companies pay these damages. Therefore, the insurance industry has shown considerable concern over the risk of climate change (Davenport 2014). In the process of evaluating this risk, the industry incurs extra costs, raising the expenses. As a result, the insurance companies may be forced by these circumstances to refuse to offer insurance cover, thereby causing a challenge to the government, who remains with only two options: to underwrite or to reduce the risk of damage (Davenport 2014). The costs of environmental change are, therefore, incorporated into the decisions of businesses, affecting global insurance activities (Davenport 2014). All in all, climate change has a potential to affect not only insurance companies but also other businesses, such as agriculture, and the global economy in general.
Many scholars have been trying to find a solution to the issue of climate change. For instance, Lomborg criticized the dominant scientific views on solving the problem of climate change. According to his argument, human activity is the primary cause of global warming (Lomborg 2015). However, he consistently criticize the government, arguing that they spend too much on the policies to solve the issue. He claims that spending too much on the policies would achieve little effect at too high cost (Lomborg 2015). He, thereby, makes two basic statements to summarise his arguments. The first statement is that applying the Paris Agreement will bring a negligible effect on the global temperature. The second assertion is that using the Paris Agreement will appear exorbitantly costly (Lomborg 2015). Clearly, Lomborg’s ideas aimed at getting a practical solution to climate change at a lower price.
To solve the problem of climate change that is currently facing the global economy, the United States and China have to play a decisive role. China is of extreme importance in the challenge of climate change because it is one of the major countries emitting greenhouse gases in the globe. China has recently become a partner of the United States (Stern 2017). The United States is the second nation after China which emits an enormous amount of greenhouse gases. The two countries, therefore, have to develop a policy discussion on the issue of climate change and clean energy. They have cooperated on the problem of climate change since 2009, and have expanded their relations (Schapiro 2014). As a result, many individuals from both the U.S. and China work together to do collaborative research, share their experience as well as information and lastly, work towards the development of commercial ventures (Stern 2017). The plan on clean energy aims at decreasing emissions that come from both power and transportation sector. Thus, through their agreement, the two countries try to mobilize the process of adopting a new global climate treaty.
The rate at which the climate changes is increasingly alarming. It affects the global economy at large and exposes all the residents of the world to various negative outcomes. An increase of the cost of energy due to global warming may be a significant burden to the economy. Similarly, climate change affects both the insurance industry and its users. It is, therefore, the duty of every nation and all individuals at large to work towards prevention of climate change. The United States and China have set an excellent example for all the other countries on addressing the issue. Lomborg’s arguments can also be an effective way to save not only the world but also the global economy from the impacts of climate change.
