Short Summary: Impact Of Climate Change On The Economy

SEMINAR IN ECONOMIC POLICY

TERM PROJECT

SUMMER 2016

IMPACT OF CLIMATE CHANGE ON ECONOMY

Submitted to: Mr. Mirza Aqeel Baig

Submitted by: Nauman Ali Khan (15813)

ABSTRACT

Pakistan has been at the receiving end of drawn out times of temperature and precipitation variation since a considerable length of time. Temperature and precipitation are the two main climatic change indicators that significantly affect the environment, social lifestyles and even the economy of any country. This study tries to investigate the extent to which climate change indicators such as temperature and precipitation have an impact on the GDP on Pakistan for a period between 1960 and 2012. Temperature is found to have an inverse relation with GDP and

In this era of industrial revolution, carbon dioxide emission has become a serious concern for environmentalists as it is one of the basic reasons for changes in these climate indicators. There is technology available and is mostly being used by developed countries that counters the carbon dioxide emission from industries and keeps the environment clean while making rift in industrial profits. However, Pakistan, being a developing country, has to undertake measures to adopt such technology and to force the industries in the country to reduce carbon dioxide emission as much as possible. These climatic changes cause severe changes to the economy in the form of storms, floods, droughts, heat and cold waves etc. Pakistan had not been much concerned about the environmental change and the risks associated with it before the disastrous environmental events started occurring. The massive tremors of 2005 and the floods in 2010 and 2011 caused massive deterioration and diverted the attention of authorities towards this critical issue. Various departments and organizations started operations. This study will use the climate change indicators temperature and precipitation of analyse the impact on these climatic changes on the overall economy.

METHODOLOGY

MODEL

To analyse the relation between gdp growth and climate indicators, the least square model of regression is to be used. The annual time series data has been

Hence, it proves that temperature has an important impact on the GDP growth and it becomes a hurdle in the economic growth of Pakistan.

CONCLUSION

The study was conducted to unveil the effects of climate change indicators on the overall GDP growth of Pakistan. Effects of climate were analysed using past data of climate variations and GDP for the period between 1961 and 2012.

The results show that temperature which is a major indicator of climate change in the world has an inverse and significant impact on the GDP which means that it has important relationship with sectors of economy like agriculture, industrial and services. Similarly, where precipitation does not seem to have a major impact on GDP, however it tends to severely affect the economy in terms of floods, sea storms etc.

Therefore, it is of utmost importance that these climate variation indicators should be thoroughly analysed and examined and proactive measures should be undertaken to avoid any disastrous consequences that these factors might bring to the lives, property of the citizens and to the economic stability of the country as a whole.