How Greenhouses Affect Economic Growth

Greenhouses Affect


There is growing scientific and public concern arose with the increased concentration of greenhouse gases in the atmosphere. A greenhouse gases emission from fossil fuels, anthropogenic activities are largely associated with various economic activities that are a major driver of climate change. In the past decades, gross US GHGs emissions increased by 2 per cent. From year and year, carbon dioxide emission rises and fall due to changes in the economy, prices and other factors. However during the global lockdown, in 2019, the US reported a fall in greenhouse gases emission. 

For almost two centuries scientists have been reporting the changes in the chemical composition of the universe-altering the whole planet climate making it hotter than ever. S.A Arrhenius estimated in 1896, doubling of the CO2 concentration would lead to an increased in global mean temperature by 4 degrees to 6 degrees Celsius. The primary sources of greenhouse gases identified are transportation, electricity production, commercial and residential, industries, agriculture, land use and forestry (Amadeo, 2019). With this many countries are engaging in reducing the GHGs, however, the rate at which sustainable goals will be achieved is quite slower. To effectively ensure the reduction in GHGs concentration countries have to work upon sustainability in the economic development thereby it is important to understand how greenhouse gases affect economic development and vice versa. This article will investigate the co-movement of the Asian and European countries, describing the casualty relationship between GHGs consumption, energy consumption and its impacts on economic growth.


At COP 21 in Paris, UNFCC members reached a landmark agreement to intensify and action and investment needed to low carbon dioxide emission. To encourage global movement required to combat climate change, a panel of six gulf countries employed from 1980 to 2012 to examine the long-run relationship between the influence of GHGs over economic development. Using panel smooth transition regression( PSTR) developed by Dijik, 2005, Iranzo and Alandis (2009) and various essay helpers examined the growth per capita and carbon dioxide in 77 non-OECD countries. The panel covered the data aftermath revealed EKC relationship for deforestation and a strong threshold effect between the GDP and deforestation intensified trade openness, political freedom and increased in per capita. 

Global environment changes have raised the question of policy formation and its implementation. The majority of the policy made are either subjective to political debates, or no scientific consensus is likely to emerge. Henceforth scientific monitoring should be firmly established showing the instantaneous contribution of economic activities on rising climate change conditions. 

One of the major challenges associated with GHGs prediction is validating the prediction. Historical evidence suggested since 1880 the global temperature exceeds by o.3 to 0.6 degrees. Whether the temperature changes are connected with the predictive climate change model or not is currently a debate topic (Caldeira and Brown, 2019). Many researchers carried out the researches used statistical techniques to test the presence of the greenhouse signal. Currently, it would be better to stay with general remarks showing the potential effect of human activities on GHGs emission.

An Analysis On The Relationship Of The Energy Environment Kuznets Curve

The environment Kuznets curve reflects hypothesized relationship between the per capita and various environmental factors. According to this model, in the early stage of development, the pollution emission will be higher, thus environmental quality degrades, but beyond some level of per capita achievement, a reverse effect will be noticed as such economic growth also contributes to the improvement of environmental conditions( Lu, 2017). Thereby assignment maker hypothesized model implies an inverted U shaped model for function per capital and pollution emission.

Figure- Environmental Kuznets curve for Sulphur emission. Adapted from- Stern, 2018

Over the past 20 years, numerous studies have been carried to show the relationship between energy/electricity consumption and economic growth. The famous widely accepted theory of the EKC U Shaped modelutilized by several researchers and essay writers, although most of the studies have used GDP square or GDP as the independent variable. These two indicators were incorporated signifies inverted U shaped curved relationship among income and environmental factors.

Source- Lu, 2017

From the forgoing studies, it was identified, majority of Asian countries are supported the EKC hypothesis as they are rapidly developing therefore the relationship between the environmental factors and economic growth would be highly dynamic.

Since industrial revolution, increased in GHGs emission due to human activities has accounted majority from the supply industries including transportation and energy/ electricity consumption.  Amid 1970 to 2004, global emission of CH4, CO2, N2O, HFCs, SF6, PFC have increased by 24% from 28.7 to 49 Gigatonnes of carbon dioxide equivalents (GtCO2-eq). However the emission of other gases emerges at different rates. The largest growth in the GHGs came into the light from the energy sector contributing 145% increments overall(Newell, 2020). The growth in this period is 120% from the transport industry, 65% from industries, 40 % from land uses and forestry, 26% from building. The emission of Ozone depleting substance reported declined in this period due to Montreal protocol, by the 1994, the emission of these ODS was 40%.

In this regards, a range of policies have been settled down those of including prospectus of climate changes, aiming to reduce growing concentration of GHS and incorporating sustainable developing goals showing considerable impact on measurement of climate change. Thescale of such measurement however not been discovered that also remained a question of doubt for many experts and policy makers.

Estimates Of Economic Looses Due To Climate Changes

The effect of climate changes will not be distributed uniformly across the globe and there will be likely some economic looses witnessing by many countries. Lets us not forget warming unfolds many times and that action would definitely have implication in the future. In the given table, we have derived estimated impact over the global economic due to climate-

StudyWarming(% GDP) Got effectedComment
Morrison and Andronova Mendelsohn, Schlesinger,  (2000)  2 degree Celsius increased by 2060A cumulative effective on GDP will be 3.6%  It has been assumed, 2.0 degrees will be increased by the year 2060, however the most damages coming from agriculture. OECD economic will be gained from the warming while other countries will be deprived. The Ricardian model estimated very small losses and some gains than reduced form model predicting, o.4% gain of GDP at 2-degree warming              
Willian, Mendelsohn, Schlesinger (2000)A new increased of 2.5 degree Celsius by 2100Cumulative market cost don’t exceed by 0.1% of GDP by 2100  The market impact because of warming might varies from country to country. High latitude countries would be expected to gain from warming while low latitudes countries will lose. However, 2 degree Celsius increase will more likely bring damages rather than gaining something to the economy.            
Stern (2005)Warming will range from 2.4°C t 5.8°C by 2100An average loss of 5% of global GDP per annum  All the commentary made based on no action. The cost will be increased by more than 20% if a wider range of impact and risks will be considered. At some extrapolation, the cost of the alone weather would be enhanced by 0.1- 5% of the world per annum( stern, 2008)            
Intergovernmental panel for climate Change assessment 5th ( IPCC)Approximately 2°CA loss of 0.2% to -2%of GDP per annum  There would be large damages countries might be seen if the temperature rises from above 3 degrees Celsius. Delaying mitigation efforts despite those made by 2030 is estimated to substantially increased the difficulties of transitioning to a low level of emission.            
Figure, Schroders, Keith, 2019

The Burden Greenhouse Effect Will Be Most Felt By Developing Countries

On a broad spectrum, the greenhouse effect will be most likely to disproportionate experienced negatively by the developing countries.As temperatures rise, Africa will be likely to face a decline in the yield and may confront struggle to produce sufficient domestic food while major exportation might be decreased in the volume. These effects will be worsening of the developed countries will not produce the offset fall in volume. Developing countries are less likely to create a drought-resistant harvest.

The increased temperature and extreme climate sensitivity will weigh governmental expenses. Aftermath, the vast natural calamities will be fallen under the government poured to be spent on major segment clears up operation and healthcare costs. Revenue reduction may also reduce heavenly depend on tourism or selling fish rights etc.

The effect of GHHs on developing countries is two folds. Since the developed countries face constraints on increased budgets, few resources or aid will be followed to developing countries. Apart from that many assignment writer opined, developing countries are less likely to build capacity.

Africa And Asia Will Be At More Risk

According to the world bank report, highly vulnerable regions affected by climate change will be sub-Saharan regions, South and South-East Africa. In South Asia, states like Mumbai and Kolkata will experience severe flooding, intense cyclones and warming temperatures. Loss of Himalayan ice will reduce the water from the Ganges and Brahmaputra basins. On the other side, Vietnam’s Mekong Delta produces most of the countries rice will be vulnerable especially when the sea level rises. For all the Sub Saharan countries, food security will be a major challenge due to shifts in rainfall and droughts.

It is estimated by researchers 80% of the regions of low latitude would experience critical natural damages. On the other side, modest regions of Canada, Russian and Scandinavia might experience benefits from the warming, however high agricultural requirements may burden up the economy. As per the standard poor research, developing countries will be affected propionate will create sovereign risks. While reporting, they assess three sovereign vulnerabilities factors including population residing in the coastal regions below five-meter of latitudes, sharing of agriculture on GDP and countries score in Vulnerability index risk. In the given below, countries are highlighted have higher and lower vulnerability indexes-

Source- Schroders, Keith, 2019

Policy Formation

Economic challenges of greenhouse gases call for collective government efforts, shareholders and individuals to both adapting and implementing the measures to mitigate its effect. As it has been defined by scientists, carbon dioxide is the main source that increases global warming, therefore policies made should be targeted to reduce carbon dioxide and its subsidiaries. Since markets are failed to pose restrictions over carbon emission, government intervention is required to decarbonize the world’s supply. 

Given commitments under the KYOTO protocols and UNFCCC, many countries are using different policies to reduce carbon emissions. A wide range of carbon taxes has been imposed on the companies. In April, A new global initiative Mission 2020 has launched by Christiana Figueres is all about bringing the new urgency to global climate change (Newell.2020). 

Mission 2020 supporters arguments the world harness momentum of the Paris agreement. The UN has recently authorized the billion of dollars of additional federal funding from for clean environment search, deployment of technology via energy act. There are green procurement policies that come into the role, thus policymakers could encourage the government agencies to purchase sustainable goods. An analysis of the social cost of carbon policy made my decision to place the valuation of the policy. Like the social cost of methane and nitrous oxide measures benefitting of reducing other potent greenhouse gas. To know more about such carbon-reducing policies, take assistance from the SourceEssay assignment help team.


 In climate sciences, human causes greenhouse gases are usually treated as devastation frequently assuming to impact the global economy. The effect of climate changes occur due to the increased concentration of GHGs will not be distributed uniformly across the globe and there will be likely some economic losses witnessing by many developing countries, especially South East Asia, South Asia countries and Sub Sharan countries. The increased temperature and extreme climate sensitivity will weigh the governmental expenses of these countries. Global environment changes have raised the question over the policy formation and its implementation, thereby it has ensured Economic challenges of greenhouse gases calls for collective government efforts, shareholders and individuals to both adapting and implementing the measures to mitigate its effect. 


Amadeo. K. 2019.Greenhouse Gas Effect on the Economy and You. Retrieved from- Data accessed on 8 July, 2021

Caldeira, K. and Brown, P.T., 2019. Reduced emissions through climate damage to the economy. Proceedings of the National Academy of Sciences, 116(3), pp.714-716.

Keith. 2020. The impact of climate change on theglobal economy. Retrieved from- Data accessed on 8 July 2021

Lu, W.C., 2017. Greenhouse gas emissions, energy consumption and economic growth: a panel cointegration analysis for 16 Asian countries. International journal of environmental research and public health, 14(11), p.1436.

Nordhaus, W.D., 1991. Economic approaches to greenhouse warming. Global warming: Economic policy responses, pp.33-68.

Newell.2020.Federal Climate Policy 101: Reducing Emissions. Retrieved from- Data accessed on 8 July 2021

Stern, N., 2008. The economics of climate change. American Economic Review, 98(2), pp.1-37.

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