Climate Change Facts and Effect on the Economy

What has climate change cost us? What's being done?

A FEMA representative surveys Hurricane Sandy damage in the Rockaways, January 17, 2013 in the Queens borough of New York

Robert Nickelsberg / Getty Images

Climate change is the disruption in the long-term seasonal weather patterns that are caused by global warming. As of August 2020, the average temperature has risen over 1 degree Celsius, or about 2 degrees Fahrenheit, since 1880. That’s faster than at any other time in the Earth’s history.

Temperatures aren't rising uniformly. The temperatures in the Arctic and Antarctic are rising faster than those in temperate and tropical areas. As a result, portions of the polar vortex have split off and blocked the jet stream. That’s a river of wind high in the atmosphere that races from west to east at speeds up to 275 miles an hour. It’s made the jet stream wobble. 

Climate change should be called climate destabilization. It's created more extreme and frequent blizzards, heat waves, and other forms of extreme weather. This extreme category includes tornados, wildfires, hurricanes, blizzards, floods and landslides, heat waves, and droughts. It also includes violent storms, whether they be dust, hail, rain, snow, or ice.

A 2017 poll showed that 55% of Americans believe that climate change made hurricanes worse. And among adult respondents to a 2019 poll who lived in an area affected by hurricanes, 63% considered climate change to be a major factor. In another 2019 poll, 57.2% of respondents reported being afraid or very afraid of global warming and climate change. 

Climate change is indeed nothing new in Earth's history. But previous changes occurred over millions of years, not decades.

What Causes Climate Change?

Global warming is the planet's response to higher levels of greenhouse gases in the atmosphere. They create a blanket that traps the heat from the sun and sends it back to the planet’s surface. Humans have contributed to the current crisis by burning fossil fuels that emit greenhouse gases.

As of September 2020, NASA-recorded carbon dioxide levels were 415 parts per million (ppm). The last time levels were this high was 2.6 million years ago during the Pliocene era. Back then, the Arctic was 8 degrees Celsius, or 14 degrees Fahrenheit, warmer in the summer than it is now. As a result, it was only frozen during the winter. With less ice, sea levels were about 25 meters higher than today. That’s enough to flood New York, London, Miami, San Francisco, and Shanghai.

Why isn’t the Earth as hot as it was then? Greenhouse gases have risen so fast that temperatures haven’t had a chance to catch up. In 1880, they were just 280 ppm.

In addition, the oceans absorbed most of the added CO2 from the atmosphere. In response, they’ve become 30% more acidic since the beginning of the Industrial Revolution. This imbalance is causing a mass extinction of sea life. For example, around half of the world’s coral reefs have died in the last 30 years.

In addition to absorbing C02, the oceans have also absorbed 90% of the heat. When water heats, it expands. That’s caused rising sea levels and flooding. 

The top 328 feet of the ocean warmed around 0.6 degrees from 1969 to 2019. The last time the ocean was this warm was 100,000 years ago. Sea levels were 20 to 30 feet higher. The ocean has warmed so fast that there hasn’t been enough time for higher temperatures to melt the arctic ice caps. As it does, sea levels will catch up to where they were last time the ocean was this warm. That’s enough to flood New York, London, and Miami.

Global warming will continue even if no more greenhouse gases were emitted starting tomorrow. The temperature is reacting to the greenhouse gases that have already been emitted. These gases must be absorbed from the atmosphere and put back into the ground to stop the effects of climate change.

On Nov. 3, 2017, the Trump administration released a report that blamed climate change on human activity. According to the Environmental Protection Agency, the U.S. sources in 2018 were electricity generation, transportation, industry, commercial and residential, agriculture, and forestry. You can see the breakdown below.

Source Fuel Percent
Electricity Generation Coal, Natural Gas 26.9%
Transportation Oil, Gasoline 28.2%
Industry Oil, Chemicals 22.0%
Commercial and Residential Heating Oil 12.3%
Agriculture Livestock 9.9%
Forestry Absorbs CO2 offset 11.6%

On a per-person basis, the U.S. is one of the worst offenders. In 2018, it emitted 16.56 metric tons of CO2 per person. Saudi Arabia, Kazakhstan, and Australia led the world in per capita emissions, with 18.48, 17.60, and 16.92 metric tons, respectively. China emitted only 7.05 metric tons per person.

Since 1751, the U.S. has contributed 400 billion metric tons of carbon dioxide. That's a fourth of total greenhouse gases. The good news is that its emissions are leveling off. The bad news is that about 20% of that will remain in the atmosphere for tens of thousands of years.

The U.S. is one of the world’s richest countries. A recent study found that the planet's wealthiest 1 billion people emit 60% of greenhouse gases. The poorest 3 billion produce only 5%. That’s why you may hear people say income inequality can cause climate change.

What's the Economic Impact of Climate Change?


From 1980 to 2020, extreme weather cost $1.825 trillion. Munich Re, one of the world's largest reinsurance firms, blamed climate change for $24 billion of losses in the 2018 California wildfires. It warned that insurance firms would have to raise premiums to cover rising costs from extreme weather. That could make insurance too expensive for most people.


Scientists estimated that, if temperatures only rose 2 degrees Celsius, the global gross domestic product would fall 15%. If temperatures rose to 3 degrees Celsius, the global GDP would fall 25%. If nothing is done, temperatures will rise by 4 degrees Celsius by 2100.  Global GDP would decline by more than 30% from 2010 levels. That's comparable to the Great Depression, where GDP fell to -26.7%. The only difference is that it would be permanent.


The World Employment and Social Outlook 2018 estimated that climate change threatens 1.2 billion jobs.

The industries most at risk are agriculture, fisheries, and forestry. Maine has already seen a decline in its lobster catches. Natural disasters caused or compounded by humans cost 23 million working-life years annually from 2000 to 2015. On the other hand, efforts to stop climate change would create 24 million new jobs by 2030. 


Climate change creates mass migration around the world. People are leaving flooded coastlines, drought-stricken farmlands, and areas of extreme natural disasters. From 2008 to 2018, events related to climate or weather have displaced 22.5 million people annually, according to the United Nations High Commissioner for Refugees. Some forecasts predict that by 2050, climate change could cause as many as 1 billion people to emigrate. 

Immigration at the U.S. border can be expected to increase as climate change worsens conditions in Latin America. The World Bank estimates that as many as 3.9 million people in Mexico and Central America will migrate internally by 2050 due to climate impact, and that subsequent deterioration will further exacerbate the movements of these migrants. Drought, shifting rain patterns, and extreme weather destroys crops and leads to food insecurity. The World Food Program found that almost half of Central Americans left because there wasn't enough food.

National Security

In 2017, Congress proclaimed that “climate change is a direct threat to the national security of the United States.” Climate change endangers 128 military bases. A 2018 Pentagon survey revealed that U.S. Naval Academy in Annapolis, Maryland has experienced storm surge flooding and hurricane damage. The Cape Lisburne Long Range Radar Station in Alaska has lost a seawall from extreme weather. In response, Congress asked the Department of Defense to identify the 10 most vulnerable sites and recommend solution strategies. 

Food Prices

As America experiences more extremely hot days, food prices are rising. Corn and soybean yields in the U.S. precipitously plummet when temperatures rise above 84 degrees Fahrenheit. Those crops feed cattle and other meat sources and create spikes in beef, milk, and poultry prices. Worker productivity declines sharply, particularly for outdoor jobs. That further increases the cost of food.

A 2019 study found that a warming ocean has pushed global sustainable fish yields down 4% since 1930. That's 1.4 million metric tons. In the North Sea and Sea of Japan, that decline is 35%. That affects Atlantic cod, haddock, and herring. Many species are threatened with extinction. That affects more than 3.3 billion people who rely on fish for their primary source of protein. It also affects the fishing industry, which at its peak in 2018 was valued at $164 billion and employed over 59 million people. It especially affects the U.S., which imports more than 80% of its seafood.

Are There Solutions to Climate Change?

The United Nations recommended that the world limit its average temperature to 2 degrees Celsius above pre-industrial levels. It's already surpassed 1 degree Celsius. Here's a timeline of what's been done.


The United Nations Framework Convention on Climate Change was formed.

Dec. 11, 1997

The United Nations adopted the Kyoto Protocol. The European Community and 37 industrialized countries promised to reduce greenhouse gas emissions between 2008 and 2012. The first commitment was to 5% below 1990 levels. The second commitment period was from 2013 to 2020. They agreed to reduce emissions by 18% below 1990 levels. The United States never ratified it. 


The International Energy Agency called for countries to spend $45 trillion by 2050 to prevent greenhouse gas emissions from slowing economic growth. To put this into perspective, the gross domestic product of the entire world was about $142 trillion in 2019. The measures included building 32 nuclear power plants each year and reducing greenhouse gases by 50% by 2050. This infrastructure would cost the world $100 billion to $200 billion a year for the next 10 years after 2008, and rise to $1 trillion to $2 trillion after that. 

Dec. 7, 2009

The Environmental Protection Agency found that concentrations of greenhouse gases threatened public health. Based on this study, the EPA finalized emission standards for cars in 2010 and trucks in 2011.

Dec. 18, 2009

The UN Climate Summit produced the Copenhagen Accord. Countries pledged to limit global temperature increases to 2 C over the pre-industrial level. The developed countries agreed to pay $100 billion a year by 2020 to assist poor countries affected the most by climate change. That includes assistance for reducing emissions from deforestation. The countries agreed to provide $30 billion over the following three years, 2010-2012. Some countries refused to sign the agreement because the United States refused to cut more than 4% of its emissions by 2020. That foot-dragging signaled to many that Obama was not any more committed than the Bush administration


China promised it would reach four climate goals by 2020. These include:

  1. Reduce CO2 emissions by 40% below 2005 levels (97% achieved in 2017).
  2. Increase renewable energy consumption from 9.4% to 15% (60% achieved).
  3. Increase forest stock by 1.3 billion cubic meters (exceeded as of 2017).
  4. Increase forest coverage by 40 million hectares relative to 2005 (60% achieved).

Aug. 3, 2015

President Obama released the Clean Power Plan. It established state targets to reduce carbon emissions from power plants by 32% below 2005 levels. The goal is to do so by 2030. The Trump administration’s Energy Independence Policy sought to replace the plan with one that focuses only on emissions from coal plants.

Dec. 12, 2015

In 2015, 195 countries signed The Paris Climate Accord. The United States pledged to cut greenhouse gas emissions by 26 to 28% below 2005 levels by 2025.  They also committed $3 billion in aid for poorer countries by 2020. These are most likely to suffer damage from rising sea levels and other consequences of climate change.

The Accord's goal is to keep global warming from rising 2 degrees Celsius above pre-industrial levels. Many experts consider that the tipping point. Beyond that, and climate change becomes unstoppable.

The United States was responsible for 15% of the world's greenhouse gas emissions as of 2018. It would be difficult for the other signatories to reach the Accord's goal without U.S. participation. But they are trying. More than 80 jurisdictions around the world have carbon pricing initiatives such as carbon taxes and tradable allowances. As of June 2020, Germany, Sweden, Denmark, and China were considering a tax on beef. Greenhouse gas emissions from livestock contribute 14.5% of the world's total.

Even if all countries follow the Accord, temperatures will continue to rise. The atmosphere is still reacting to the CO2 that's already been pumped into it. Greenhouse gases have been added so quickly that temperatures haven't caught up yet.

As a result, measures need to be stricter to reverse global warming. The Climate Impact Lab predicts major cities will see many days above 95-degree Fahrenheit. By 2100, Washington D.C. will experience about 78 extremely hot days each year. That's almost 10 times the average of 8.8 it experienced from 1981 to 2010.

Nov. 4, 2016

The Paris Agreement went into force as 55 members ratified the agreement. They make up 55% of global emissions.

June 1, 2017

President Trump announced the United States would withdraw from the Paris Accord. Trump said he wanted to negotiate a better deal. Leaders from Germany, France, and Italy said the Accord is non-negotiable. China and India joined the other leaders in stating they remain committed to the Accord.  Some have argued that America's withdrawal from a leadership position creates a vacuum that China will readily fill. The United States cannot legally exit until Nov. 4, 2020. This timing makes it an issue for the 2020 presidential election. 

Business leaders from Tesla, General Electric, and Goldman Sachs denounced the withdrawal. U.S. companies need government support and subsidies in these industries to pay for research and bring costs down.

China is already taking the lead in electric vehicles. Almost half of the world's plug-in electric vehicles are sold in China. Its regulations and subsidies drive consumers away from gasoline-powered cars. China wants to reduce pollution. It also wants to reduce reliance on foreign oil. But more importantly, it wants to improve the country's automakers. China's car market is large and is forcing foreign carmakers to improve electric vehicle production.

Oct. 10, 2017

The Trump administration proposed to repeal the Clean Power Plan.

Nov. 8, 2017

The European Union agreed to cut carbon-dioxide emissions by new vehicles by 30% between 2021 and 2030.

Dec. 12, 2017

French President Emmanuel Macron convened world leaders to the One Planet Summit. Macron told TIME that Trump was not invited because he withdrew from the Accord. The summit focused on how to finance the global transition away from fossil fuels.

September 2018

A team of administrative appointees submitted to the governor of Alaska its detailed action plan for addressing climate change. Even though it is a major oil producer, it's feeling the effects of global warming. The permafrost is thawing, destabilizing roads, and buildings that sit on it. Protective sea ice is melting, allowing powerful waves to erode Alaskan shores. As a result, 31 coastal towns may need to relocate. 

The world's 1,000 biggest corporations contribute 12% of greenhouse gas emissions. In 2017, 89% had plans to cut those emissions. But it's not enough to reach the U.N.'s target of 2 degrees Celsius. Fourteen percent of the companies already achieved or had goals to align with that target. Another 30% pledged to do so in the following two years. Investment firms, such as HSBC Holdings and Goldman Sachs, have begun targeting more low-carbon businesses.

Republican Newt Gingrich, the former Speaker of the House, argued for the importance of supporting entrepreneurial environmental solutions in his 2007 book, A Contract With the Earth. Pressure on the market forces that got the atmosphere into trouble is the best solution to clean it up.

7 Steps You Can Take to Help Stop Climate Change

Until there is stronger government leadership, we must create our progress. Many everyday citizens and entrepreneurs are hard at work on innovative ways to address climate change.

First, plant trees and other vegetation to halt deforestation. You can also donate to charities that plant trees. For example, Eden Reforestation hires residents to plant trees in Madagascar, Haiti, Nepal, Indonesia, Mozambique, Kenya, and Central America for $0.10 a tree. It also gives the very poor people an income, rehabilitates their habitat, and saves species from mass extinction. 

Second, become carbon neutral. The average American emitted 16.56 metric tons of CO2 in 2018. One study estimates that coastal mangrove trees have the potential to store 20 billion tons of carbon. The cost of preserving enough mangroves to offset most emissions would be about $4 to $10 per ton of CO2, potentially around half of the European Union Emissions Trading Scheme offset price.

The United Nations program Climate Neutral Now also allows you to offset your emissions by purchasing credits.  These credits fund green initiatives such as wind energy or solar power heaters in developing countries. 

Third, enjoy a plant-based diet with less meat. Cows create methane, a greenhouse gas. Monoculture crops to feed the cows cause deforestation. The Drawdown Coalition estimated those forests would have absorbed 39.3 gigatons of carbon dioxide. Greenpeace points out the production of these food items will create 50% of global greenhouse gas emissions by 2050.

Similarly, avoid products using palm oil. Most of its production comes from Malaysia and Indonesia. Tropical forests and carbon-rich swamps are cleared for its plantations.  Avoid products with generic vegetable oil as an ingredient.

Fourth, pressure corporations to disclose and act on their climate-related risks. Since 1988, 100 companies are responsible for more than 70% of greenhouse gas emissions. The worst are ExxonMobil, Shell, BP, and Chevron.

Fifth, reduce food waste. The Drawdown Coalition estimated that as much as 18.8 gigatons of CO2 emissions would be avoided if food waste was reduced by 50% by 2050.

Sixth, cut fossil-fuel use. Where available, use more mass transit, biking, and electric vehicles. Or keep your car but maintain it. Keep the tires inflated, change the air filter, and drive under 60 miles per hour. 

Seventh, hold the government accountable. Each year, $2 trillion is invested in building new energy infrastructure. The International Energy Administration said that governments control 70% of that. 

Similarly, people can vote for candidates who promise a solution to climate change. The Sunrise Movement is pressuring candidates to adopt a Green New Deal. More than 3,000 candidates and elected officials have signed a pledge not to accept contributions over $200 from the fossil fuel industry.

What's the Outlook on Climate Change?

Scientists predict that by 2050 temperatures will have caught up with today’s level of CO2. That’s when there will be no Arctic ice in the summer. The dark ocean that replaces it will absorb even more heat. It will create a chain reaction that will further heat the Earth’s temperature even if we stop emitting additional greenhouse gases.

Greenhouse gas emissions increased by 41% from 1990 to 2020. Levels dropped in 2016, but have risen since.  Power plants began switching from coal to natural gas, and a warmer winter reduced demand for heating oil.

There are no safe places in a climate-change future. Climate destabilization means that the world will be pummeled by extreme weather. Also, mass extinction threatens agriculture. A United Nations report estimates that 17% of bats and birds that pollinate are at risk, and that 75% of the world’s food crops rely on pollinators to some extent. If these species go extinct, so does almost 8% of the world’s food production. A third of the fishing areas are over harvested. Everyone will be affected in ways that are difficult to imagine now.

The Bottom Line

Climate change is a global reality that must be addressed now. The colossal quantities of carbon dioxide pumped into the atmosphere over the past century are warming temperatures at a seriously rapid rate. Because of this, flooding, extreme weather, wildfires, and other natural disasters are occurring more frequently and at a greater degree of intensity than ever.

Decisive, committed actions must be taken today to avert an added temperature rise exceeding 2 degrees Celsius or 35.6 degrees Fahrenheit. This is the world’s tipping point before permanent catastrophes descend and change life as we all know it. Today, we only have 0.5 degrees Celsius leeway before this happens. It’s time to punch that red alert button to push everyone in the world to lower their carbon emissions now before it becomes too late.

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