David K.H. Begg, Gianluigi Vernasca-Economics-McGraw Hill Higher Education (2011)

13.6 Environmental issues and the economics of climate change
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Data from thermometers (red) and from tree rings,
corals, ice cores and historical records (blue).
1400 1600 1800 2000
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Figure 13.8 A brief history of global temperature
Source: Intergovernmental Panel on Climate Change.
The economics of climate change
There is increasing evidence that global temperatures are rising. The science of climate change means that
we are also likely to see greater fluctuations in climate as well. Hence, extreme events will become much
more frequent. Large parts of Bangladesh may disappear under water for ever; and English villages, from
Yorkshire to Cornwall, have already experienced flash flooding. Conversely, regions of the world that are
currently temperate may become arid and uninhabitable. Figure 13.8 shows the dramatic change in global
temperatures in recent years.
The science of climate change
The earth's climate is affected by many things, from solar radiation to the consequences of human behaviour.
The ebb and flow of previous ice ages reminds us that human behaviour is not the only cause of climate
change. Even so, there is increasing evidence that we must look to ourselves as a major cause of recent
global warming.
In the same period in which we experienced an increase in global temperature, there was a significant
increase in global C02 emissions due to human activity. This is shown in Figure 13.9.
Greenhouse gases - including carbon dioxide and methane - shield the earth from solar radiation, but also
trap the heat underneath. Without them, all heat would escape and we would freeze to death. But we need
just the right amount. Too much greenhouse gas and the earth overheats, causing global warming.
The recent build-up of greenhouse gases reflects large emissions of carbon dioxide from households, power
stations and transport. This may cause ice to melt and water to expand, causing sea levels to rise. A
catastrophic eventual consequence would be melting of permafrost in Siberia, releasing such volumes of
methane that a large rise in temperature would then be inevitable, perhaps threatening human survival.
Carbon, a key constituent of all greenhouse gases, is a useful common denominator. Slowing, let alone
reversing, global warming requires the emission of much less carbon.
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