Global warming and the economy

Climate change is one of the biggest challenges facing humanity today, requiring international cooperation and effective measures at various levels to ensure sustainability for future generations.

Climate change refers to long-term changes in temperatures and weather patterns on our planet. Scientific reports indicate that the Earth's temperature has risen by approximately 1.5°C since the beginning of the industrial revolution in the early 19th century, affecting many sectors. These changes can be natural, but human activity has significantly accelerated these changes through greenhouse gas emissions. The world has witnessed multiple impacts of climate change, including direct effects on various sectors such as agriculture and food security, water resources, infrastructure, public health, energy, trade, disruption of supply chains, and, finally, general economic costs. Governments and companies must invest large amounts in adapting to climate change and its consequences, which will affect public budgets and lead to long-term economic fluctuations. This will be impacting growth and development.

The causes of climate change include human emissions and the burning of fossil fuels (such as oil, coal, and natural gas), increases the levels of carbon dioxide (CO2) and methane (CH4) in the atmosphere. Deforestation also reduces the earth's ability to absorb CO2, resulting in weather changes and climate shifts. According to a World Bank report, the economic losses caused by weather-related disasters are estimated at hundreds of billions of dollars annually, reaching approximately $350 billion / year between 2010 and 2020. Additionally, climate change has significant economic effects on agricultural sectors. A World Bank report stated that climate change poses a major threat to food security and could reduce agricultural productivity by 2–2.5%, in various parts of the world.

Climate change and the economy are closely connected. Climate change is not just an environmental issue; it is an economic challenge requiring comprehensive responses from governments, private sector, and society. Nations need to develop effective strategies to adapt to and mitigate the effects of climate change to ensure the sustainability of their economies. The primary challenge lies in balancing economic growth and addressing climate change, which is costly and demands substantial investments. I believe failing to take preventive or corrective measures on the right time can lead to much higher costs in the long term.

International reports highlight a direct link between climate change and the economy due to its deep effects on global and local economies. Environmental impacts overlap with various economic sectors depending on geographic areas and the economic sectors involved. Climate change impacts the economy through a wide range of direct and indirect effects that influence economic growth, productivity, and financial stability. These impacts are evident in areas such as investments, insurance, trade, disruption of global supply chains, rising living costs. Extreme weather events, such as floods, hurricanes, and wildfires, can damage infrastructure. In agriculture and food, shifting weather patterns and drought affect crop yields, leading to reduced productivity and increased prices. Public health is also impacted, with heat-related illnesses and flooding-related diseases increasing healthcare costs. Tourism is affected too, with declining investments in environmentally degraded areas, such as coral reefs or snowy regions, impacting tourism revenues. The energy sector is also influenced, as the need to reduce carbon emissions drives significant shifts toward renewable energy.

Climate change and its impact on the economy have gained global attention. General statistics on climate change and its impact reveal notable figures that demand consideration. Measures to adapt to climate change include transitioning to renewable energy, reducing energy costs, promoting green transportation and adapting to climate change in the agricultural sector by applying sustainable agricultural practices and improving water management. Advanced irrigation techniques and climate-resistant crop varieties should also be developed and adopted.  

Economic policies and preventive measures to address climate change include imposing carbon emission taxes to reduce greenhouse gas emissions, enacting strict environmental legislation to comply with environmental standards, and providing financial incentives to support green projects. Financial subsidies should be provided to individuals and companies using renewable energy. Joining international agreements, such as the Kyoto Protocol to reduce carbon emissions and Paris Climate Agreement, aims to foster international cooperation for sustainable goals.

On the other hand, despite the above challenges, there are economic opportunities associated with addressing climate change, such as the low-carbon economy (electric vehicles, solar energy, and wind energy) and innovation in green technology. Financial tools are available to support climate change process, including public financing through allocating budgets for climate-resilient infrastructure, clean technology, and financial support for farmers and businesses.  Private investments also can finance start-ups and technological innovations in climate adaptation. Climate insurance can mitigate the financial impacts of natural disasters, encouraging individuals to take certain measures. Tax incentives and financial rewards can encourage businesses and individuals to adopt climate change adaptation measures, apply clean technologies, and install renewable energy systems in homes. Collaboration with non-governmental organizations, such as Greenpeace, IRENA (International Renewable Energy Agency), UNEP (United Nations Environment Programme), and UNIDO (United Nations Industrial Development Organization), can help countries achieve their goals of mitigating the negative impacts of climate change.

In Jordan, climate change poses significant challenges as the country has limited water resources and a relatively harsh climate, making it exposed to climate change challenges. Jordan relies heavily on rainfall and river water for its water needs. With declining rainfall and reduced snow accumulation in mountains, Jordan faces significant challenges in securing water for drinking, agriculture, and industry. This results in disruptions across various sectors and additional costs for securing water, impacting economic growth. Jordan also suffers from rising temperatures and worsening drought, affecting agricultural sector which directly impacts food security and economic stability.
To address these challenges, Jordan government is developing strategies to adapt to climate change and enhance environmental sustainability. These efforts include commitment to the UN Framework Convention on Climate Change, Kyoto Protocol and Paris Climate Agreement. Jordan has formulated a national climate change strategy for 2013–2020, extended to 2025, focusing on developing renewable energy sources, improving energy efficiency, managing water resources sustainably, reducing greenhouse gas emissions, and preparing for climate adaptation. These measures include enhancing water management, strengthening infrastructure resilience, encouraging investments in renewable energy, and promoting sustainable agriculture. Jordan recently signed the national carrier agreement, which provides over 300 million cubic meters of drinkable water from the Red Sea using the BOT (Build, Operate, Transfer) system.

Jordan is actively participating in international initiatives to fight climate change and foster international cooperation. Jordan is committed to achieving the goals of the Paris Climate Agreement, including reducing greenhouse gas emissions and promoting environmental sustainability. Jordan is expected to continue its efforts to tackle climate change by increasing reliance on renewable energy, as primary electricity sources to reduce dependence on fossil fuels and lower greenhouse gas emissions. It also seeks to enhance energy efficiency in various sectors, including industry, buildings, and transportation. Jordan is working on developing environmental policies and legal frameworks to promote a low-carbon economy and support innovative environmental and technological initiatives, alongside improving water management to address increasing water challenges.