Global warming is already taking its toll. In Darfur, where several hundred thousand people have died in recent years from the internal conflict, climate change has exacerbated water and land shortages (because of growing desertification), undermined agriculture, and fueled conflict over these scarce resources among the poor. March 2008
It Is not immediately obvious what role financial markets can play in addressing climate change. Climate change happens slowly and has a global impact on the physical environment, whereas financial markets react to news in fractions of a second and are almost liberated from specific physical locations. the low energy intensity of the financial sector means that reductions in greenhouse gas (GHG) emissions would have little impact on the physical operations of financial markets and institutions. March 2008
Climate science tells that the earth is warming as a result of human activities. But considerable uncertainty regarding the precise nature and extent of the risks remains. Economists are needed to develop sensible policies to address these risks, which account for the uncertainties.
John Steinbeck's The Grapes of Wrath provides a verbal mural depicting America's experience in the Dust Bowl of the 1930s, with its migration of "Okies" from ruined farmlands in Oklahoma and Texas to a not-so-promised land in California. This historical experience and perhaps the present-day drought of biblical proportions in Australia should alert international policymakers to the risks to world agriculture of a hotter and drier world by late this century as a consequence of unarrested global warming. March 2008
Addressing climate change and the economic damage it will likely bring presents policymakers with a dilemma. The benefits of policy action are uncertain and would accrue largely to future generations, whereas the costs of policies run the risk of being more immediate and extensive. At the same time, the costs of inaction are irreversible, potentially catastrophic, and likely to hit poorer countries harder than developed ones.
