High cost of the greenhouse effect

The cost of climate change is expected to place a heavy burden on the Greek economy, according to the latest evidence. In the Stern Review on the Economics of Climate Change, British scientists conclude that if steps are not taken immediately to limit the greenhouse effect, the total cost of the impending environmental disaster will, over the next 50 years, total 5.5 trillion euros. On an annual basis, climate change will cost the global economy 5 percent of the global gross product. These predictions of gloom are even more serious considering that the total cost of adopting environmentally friendly practices would be at least 50 times cheaper – just 0.1 percent of gross global product annually. The latest evidence, translated into dollars and euros from temperatures and rainfall levels, have created new conditions for the global economy. According to Harilaos Loukos, founder of Climpact, a company based in France that specializes in managing climatic risk for businesses in all sectors, corporate groups such as insurance firms (that will have to absorb a major share of the cost of climate change) are exerting pressure for immediate restrictions on gas emissions. «A typical example is the war being waged in the USA between the automobile industry and the insurance and investment firms. Prompted by fears of the economic fallout from Katrina, the latter are putting pressure on polluting industries to restrict their greenhouse gas emissions,» Loukos told Kathimerini. Major institutional investors also appear to be considering the effects of climate change on business activity before deciding where to put their money. That is, a firm’s ability to adapt to the new planetary conditions is emerging as a major criterion for investors. «Those interested in investing in power production companies are trying to forecast the effects on turnover of an average temperature increase of 2-4 degrees Celsius. Correspondingly, those interested in airlines are hesitating, given the increased cost for these firms of a decision to limit carbon dioxide emissions from aircraft,» he said. Retail trade is also expected to be seriously affected, given the rapid increase in the number of consumer product manufacturers (mainly food and drink) «drafting their business plans on the basis not only of marketing but of meteorological forecasts.» It is no coincidence that Climpact (which processes forecasts by French institutes in order to make sales forecasts for their customers) has broadened its market to include advisory services and risk management with regard to climate change, expanding its customer network. Moreover, interest in risk-management services has been shown by shopping malls, cosmetics firms, supermarket chains and the Paris Metro.

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