Julio Salmeron-Perla

Climate and Climate Change

21 February 2019

The Implications of Climate Change on GDP (Gross Domestic Product)

The effects of climate change are severely affecting countries GDP’s around the world. Since GDP is a
measurement of the economic production of a country, the fluctuations in temperature caused by climate
change are altering the natural processes and availability of natural resources that are necessary for
economic production.

An important part of GDP consists of consumption by private households. An essential portion of private
household consumption is food. The continuous ever-increasing changes in Earth’s climate will cause a
decrease in essential food crops by about 35% due to extreme weather.1

Crop sustenance is dependent upon water availability. Weather alterations caused by climate change can
lead to water scarcity which will result in an average of a 6% GDP decrease in some regions around the
world because their productions (exports and private household consumption) decreased as a result of
losses of thousands of crops.2

In most developed economies the exports of good and services produced in the country are on average
30% of the entire GDP. Therefore, a decrease in the yield of crops would affect a significant amount of
the revenue obtained from the exporting of food, causing economic growth to fall.3

Climate change has caused a surge in the frequency and potency of storms, in the last 10 years in the
United States there has been a 45-87% surge in Category 4 and 5 Hurricanes.4

Frequent and stronger storms cause significant damage to infrastructure or physical capital which is what
enables economic production. In recent years, hurricanes in the US have costed the government about
$217 billion dollars in infrastructure reparation.5

Damage to infrastructure (Physical Capital) negatively impacts GDP because physical capital(factories,
machinery, workers) is what enables economic growth/production

All of these ocurrences as direct effects of climate change negatively impact GDP’s consumption,
investment, and exporting attributes. Some GDP’s around the world will be impacted more than others
depending on the region of the country and how vulnerable they are to the adverse effects of climate
change. What it is certain is that most researchers can agree that most countries will suffer loss of
economic growth if not initially then eventually as a result of climate change.
Julio Salmeron-Perla
Climate and Climate Change
21 February 2019
Sources

1. How Will Climate Change Alter Our Food. New York (NY): Earth Institute Columbia
University; c2018-2019 [accessed 2019 Feb
19].https://blogs.ei.columbia.edu/2018/07/25/ climate-change-food-agriculture/.
2. High and Dry: Climate Change, Water, and the Economy:World Bank Group; c2016
[accessed 2019 Feb 18].
3. Exports of Goods and Services: The World Bank Group; [18 Feb 2019].
4. Hurricanes and Climate Change:National Hurricane Center; [ 19 Feb 2019].