Climate Change and Economic Growth

Climate Change and Economic Growth

Key Questions

• How does economic growth impact climate change?
• Can we grow economies without harming the environment?
• Overview of economic development and sustainability

What is Climate Change?

• Climate change refers to long-term shifts in temperature and weather patterns due to human activities.
• Causes of Climate Change:
  • Greenhouse gases (CO₂, CH₄, N₂O)
  • Fossil fuel combustion (coal, oil, gas)
  • Industrialization & deforestation

The Greenhouse Effect

• Natural: Naturally occurring greenhouse gases trap some heat from the sun to maintain a livable climate.
• Human-Enhanced: Burning fossil fuels emits greenhouse gases that trap more heat & cause additional warming.
• Sun Energy, Greenhouse Gases, Heat

Impact of Climate Change: Key Consequences

• Key Consequences:
  • Rising Global Temperatures
  • Extreme Weather Events
  • Melting Ice Caps & Rising Sea Levels
  • Biodiversity Loss
  • Food and Water Scarcity
  • Droughts and changing rainfall patterns affect global agriculture.

World Weather Attribution Studies 2024

• Lists various extreme weather events globally and assesses whether they were more severe/likely, less severe/likely, or showed no evidence of change in relation to climate change.
  • Examples include extreme rainfall in various countries, heatwaves in Asia and Europe, droughts in Panama and Italy, and wildfires in Chile.

Rising Sea Levels

• Rising sea levels have wide-reaching implications on the physical environment, as well as the economic, social, and cultural fabric of vulnerable nations.
• Saltwater flooding can damage coastal habitats, including coral reefs and fish stocks, agricultural lands, and infrastructure, including housing, and it can impact the ability of coastal communities to sustain their livelihoods.
• Flooding can contaminate fresh water supplies, promote waterborne diseases threatening people’s health, and lead to stress and mental health problems.
• Tourism revenues, a key economic driver, especially in many small island developing States (SIDS), can suffer as beaches, resorts, and other tourist attractions like coral reefs are damaged.
• The combination of so many factors can force people to leave their homes, relocate to higher ground where available, or ultimately migrate, which in turn disrupts economies, livelihoods, and communities.

The Sahel

• The Sahel is located directly south of the Sahara desert and stretches from the east to the west of Africa.
• The Sahel is semi-arid, receiving between 250 and 450 mm of rainfall in total in an average year; however, it only falls in one or two months.
• This region provides Africa with food and cash crops such as millet and cotton.
• Since the 1970s, the Sahel has experienced drought conditions on a regular basis. This is down to physical and human factors:
  • Overgrazing and deforestation on marginal land can lead to desertification. With less vegetation, there is less transpiration and evaporation from the soil, causing less rainfall.
  • Changes in surrounding ocean temperature temperatures of the south Atlantic and Indian Oceans increased, with a smaller temperature gap between land and ocean, and monsoon rains were reduced.
  • Some scientists believe climate change has reduced rainfall or made it less predictable.

The 2022 Pakistan Floods

• In 2022, Pakistan experienced its worst floods in history, with one-third of the country submerged due to extreme monsoon rainfall.
• The flooding was worsened by glacier melting in the Himalayas, linked to rising global temperatures.
• Impact:
  • Over 33 million people were affected, with thousands of deaths.
  • $$40 billion in damages to homes, roads, and agriculture.
  • Food shortages as crops were destroyed, leading to hunger and inflation.
  • Health crisis: Waterborne diseases like cholera and dengue fever spread rapidly.
• Connection to Climate Change:
  • Warmer global temperatures intensified monsoons beyond historical norms.
  • Melting Himalayan glaciers increased flood severity.
  • Poor infrastructure & deforestation worsened flood damage.

Amazon Rainforest Deforestation (Economic Growth & Its Costs)

• Cattle Ranching (80% of Amazon Deforestation)
  • Brazil is the world’s largest beef exporter (~25% of global beef exports).
  • Demand from China, the EU, and the U.S. fuels expansion.
  • Clearing forests for pastureland boosts Brazil’s GDP and provides millions of jobs.
• Soybean Farming (20% of Amazon Deforestation)
  • Brazil is the world’s second-largest soybean producer.
  • Soy is used in animal feed (for global meat production) & biofuels.
  • Large agribusinesses like Cargill & Bunge drive deforestation to expand plantations.
• Logging & Mining Bring Jobs But Destroy Ecosystems
  • Illegal logging: Brazil’s timber industry exports high-value hardwood to global markets.
  • Mining boom:
    • Gold, bauxite, and iron ore extraction bring revenue.
    • The Carajás mine (largest iron ore mine) generates billions in exports.

Consequences of Economic Growth Driven Deforestation

• Rising CO₂ Emissions:
  • The Amazon absorbs 5% of global carbon emissions, but deforestation releases massive amounts of CO₂.
  • Brazil’s CO₂ emissions surged by 9.5% in 2021, mainly from land-use changes.
• Biodiversity Loss:
  • Home to over 10% of the world’s species, including jaguars, sloths, and macaws.
  • Habitat destruction puts thousands of species at risk of extinction.
• Threat to Indigenous Communities:
  • Indigenous tribes like the Yanomami & Kayapó lose land and resources.
  • Land conflicts often result in violence & displacement.
• Disrupting Rainfall & Global Climate:
  • The Amazon generates 20% of the world’s fresh water and regulates rainfall across South America.
  • Deforestation is causing droughts & unstable weather patterns.

Trade off: Economic Growth vs. Sustainability

• Arguments Against Unregulated Growth:
  • Causes pollution & environmental destruction.
  • Leads to resource depletion.
  • Creates long-term economic instability due to climate damage.
• Arguments for Economic Growth:
  • Increases jobs & income.
  • Improves infrastructure & quality of life.
  • More tax revenue for social programs.

The Circular Economy – Can We Have Growth Without Harm?

• A circular economy is a system where products, materials, and resources are kept in use for as long as possible, reducing waste and environmental harm.
• It replaces the traditional "linear economy", which follows a “take, make, waste” model (extract raw materials → produce goods → dispose of waste).
• Instead of depleting resources, a circular economy minimizes waste by reusing and recycling materials.

Key Principles of a Circular Economy

1. Design for Longevity: Products are made to last longer, reducing the need for frequent replacements.
2. Reuse & Repair: Items are repaired or refurbished instead of being thrown away.
3. Recycling & Regeneration: Old materials are reprocessed into new products, reducing demand for new raw materials.
4. Renewable Energy: Industries use solar, wind, and hydropower instead of fossil fuels.

Why It’s Good for Economic Growth

• Saves businesses money – reduces waste disposal & production costs.
• Creates new jobs – industries like repair, refurbishing, and recycling expand.
• Encourages innovation – businesses find profitable ways to be sustainable.
• Reduces reliance on limited resources – keeps economies stable & resilient.

IKEA’s Circular Economy Model

• Why IKEA Needs a Circular Model
  • IKEA is one of the largest furniture retailers in the world, producing millions of products each year.
  • Traditionally, furniture is made from wood, plastic, and textiles, which contribute to deforestation and landfill waste.
  • To remain profitable while reducing environmental damage, IKEA is shifting toward a circular economy model.

How IKEA Implements a Circular Economy

1. Using Sustainable & Recycled Materials
   • IKEA aims for 100% circular products by 2030.
   • Uses recycled PET plastic, wood industry scraps, and renewable cotton instead of virgin materials.
2. Furniture Take-Back & Resell Programs
   • Customers can return old IKEA furniture, which is then repaired, refurbished, and resold instead of being discarded.
   • IKEA offers “Buy Back & Resell” programs in some countries to promote reuse.
3. Renewable Energy & Carbon Reduction
   • IKEA is transitioning to 100% renewable energy in its production facilities.
   • Uses solar and wind power in stores and factories to reduce carbon emissions.
4. Flat-Pack Design to Reduce Waste & Emissions
   • IKEA’s famous flat-pack furniture reduces the need for excess packaging, allowing more items to be transported efficiently.
   • This significantly lowers transport emissions and waste.

Economic and Environmental Impact

• Less landfill waste → Reduces IKEA’s environmental footprint.
• Lowers production costs → Using recycled materials saves money.
• Encourages customer participation → Increases engagement & brand loyalty.

Paraguay’s Renewable Energy Model

• How Paraguay Achieves Nearly 100% Renewable Energy

1. Itaipú and Yacyretá Dams Hydropower as a National Strategy
   • Paraguay has two massive hydropower plants, Itaipú and Yacyretá, which generate nearly all the country's electricity.
   • The Itaipú Dam is one of the world’s largest hydroelectric plants, supplying 90% of Paraguay’s electricity and also selling power to Brazil.
2. Selling Surplus Energy to Neighboring Countries
   • Paraguay produces more electricity than it consumes, making energy a key economic export.
   • Brazil and Argentina purchase electricity from Paraguay, bringing in millions of dollars in revenue.
3. Economic Growth Without Fossil Fuels
   • Paraguay has minimal reliance on coal, oil, or gas, avoiding the carbon emissions that harm the planet.
   • This makes Paraguay a model of how an economy can grow while remaining sustainable.

Economic & Environmental Benefits

• No dependence on fossil fuels → Paraguay avoids price fluctuations in oil & gas markets.
• Long-term energy security → Ensures stable electricity supply for industries & homes.
• Revenue from energy exports → Strengthens national economy.

Challenges & Future Opportunities

• Hydropower plants can disrupt ecosystems, affecting local fish populations and river communities.
• Paraguay still needs to develop infrastructure for energy storage and distribution.
• Potential to expand into solar and wind energy for even greater sustainability.

International Agreements to Combat Climate Change

• Why Do We Need Climate Agreements?
  • Climate change is a global issue—no single country can solve it alone.
  • Greenhouse gas emissions don’t respect borders—CO₂ from one country affects the entire planet.
  • Climate agreements help set goals, enforce accountability, and encourage economic shifts toward sustainability.

United Nations Framework Convention on Climate Change (UNFCCC) – 1992

• What is the UNFCCC?
  • A global treaty adopted at the 1992 Earth Summit (Rio de Janeiro, Brazil).
  • First international commitment to addressing climate change.
  • Signed by 197 countries, including major polluters like the U.S., China, and India.
• Key Goals of the UNFCCC:
  • Stabilize greenhouse gas emissions to prevent dangerous climate changes.
  • Help countries transition toward sustainable development.
  • Encourage global cooperation through agreements like the Kyoto Protocol and Paris Agreement.
• Why It Matters:
  • Led to the creation of legally binding agreements like the Kyoto Protocol (1997) and Paris Agreement (2015).

The Kyoto Protocol (1997) – The First Legally Binding Climate Treaty

• What is the Kyoto Protocol?
  • Signed in 1997 in Kyoto, Japan, and came into force in 2005.
  • The first legally binding treaty under the UNFCCC.
  • Required developed countries to reduce greenhouse gas emissions based on their historical responsibility for climate change.
• Key Features:
  • Binding Targets for Developed Countries
    • Industrialized nations (like the U.S., Canada, and the EU) had specific CO₂ reduction targets.
    • Developing nations (China, India, Brazil) had no legal obligations.
  • Carbon Trading (Cap and Trade System)
    • Countries that emitted less than their target could sell carbon credits to other countries that exceeded their limits.
    • Created a market for carbon emissions to encourage businesses to go green.
• What Went Wrong?
  • The U.S. never ratified the treaty, arguing it was unfair to exempt China & India.
  • Canada withdrew in 2011, saying targets were too hard to meet.
  • No penalties for non-compliance, making enforcement weak.
• Outcome:
  • Despite its flaws, the Kyoto Protocol paved the way for the Paris Agreement (2015).
  • Many countries realized that developing nations also needed to participate for real change.

The Paris Agreement (2015)

• What is the Paris Agreement?
  • Signed in 2015 during COP21 in Paris, France.
  • The first agreement where both developed & developing nations committed to fighting climate change.
  • Unlike Kyoto, all countries set their own targets (Nationally Determined Contributions, NDCs).
• Key Goals:
  • Limit global temperature rise to below 2°C (preferably 1.5°C).
  • Cut global emissions to net-zero by 2050.
  • Every 5 years, countries update their climate goals (first update in 2020)
• Major Differences from Kyoto:
  • Every country participates, including China and India.
  • No penalties, but countries are expected to meet their self-set goals.
  • More ambitious targets focused on renewable energy & economic transition.
• Challenges & Criticism:
  • Some countries (like the U.S. under Trump) temporarily withdrew but later rejoined, and then withdrew again.
  • Many countries are still not meeting their targets—global emissions continue to rise.
  • No legal enforcement, meaning some countries delay action.
• Why It Still Matters:
  • The Paris Agreement pushes countries toward green energy, following the example of Paraguay (100% hydropower).
  • It encourages economic growth through renewable energy—more green jobs & investments.
  • Large economies like the EU, U.S., and China are making massive renewable energy investments to meet Paris targets.

How Do Climate Agreements Promote Green Growth?

1. Renewable Energy Incentives – Countries that commit to emissions reductions receive funding & technology support.
2. Carbon Pricing & Penalties – Countries that emit too much CO₂ face economic costs (carbon taxes, tariffs).
3. Financial Support for Developing Nations – Richer countries invest in clean energy projects in poorer nations.