Juan Carlo Pascua | Thursday 12th November 2009
Part two of the American Policy portion of the Climate Change Policy Series: Act America, act now, sooner than later. Climate change inaction stands to cost Americans trillions of dollars due to loss of biodiversity, economic spillovers, national security, and migration. The bottom line, mitigating climate change now and swiftly will save Americans more money than inaction or slow action.
Unfortunately, many of today's American policy makers misuse climate models for short term gain. These models should be taken with a grain of salt; they are educated predictions of the future that leave out major considerations. Considerations oft ignored include economic spillovers, which are side effects of economic activity that affect an industry in a positive or negative way. In terms of climate change, most effects on countries and their industries are negative; there are no net winners of climate change. Economic spillovers caused by climate change stand to harm American supply, demand, and financial markets (Freeman & Guzman, 2009).
Regarding supply and demand shocks, the United States is a net importer. Among all the products and goods available to US consumers, from beverages and tobacco to machinery and transport goods, the USA is only a net exporter (by small margins) of food, live animals, and crude non-fuel, inedible materials (U.S. Census Bureau, 2009). Not only does the US rely heavily on foreign countries for oil, but it relies on foreign countries for everything else as well. American exports also share reliance on foreign markets: in 2007 US exports accounted for $1.6T and every year since 1997 exports have accounted for about 10% of US GDP (Freeman & Guzman, 2009). Just a 5% drop in demand for US exports would cost the US $80B a year; a 10% decrease in exports will cost $160B annually, so on and so forth. Many foreign markets stand to shrink due to climate change, and so will their demand for US goods. Over time, this represents trillions of lost US dollars.
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