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Climate change 10 Dec 2019

Employment: the other big winner in the fight against climate change

Year 2050: 300 (270–340) million people today live on land indicated as vulnerable to an annual flood event. According to a report by Nature Communications, at the current rate of global warming and Antarctic ice sheet instability, estimates of vulnerability to sea-level rise and coastal flooding triple for Asia, to a greater extent, but also European Mediterranean countries.

Science has confirmed, study after study, that climate change has become one of the biggest threats facing our planet, and not only from an environmental standpoint.  Indeed the 4º C temperature increase by 2100 forecasted by the Intergovernmental Panel on Climate Change, confirms that the greenhouse effect will have an impact on citizens’ income levels.

Recent studies indicate that the impact of a 4º C increase will cause per capita income levels to decline between 4.4% and 10% in the long term. On the contrary, limiting global warming in line with the Paris Agreement (2015), this decline would be limited to somewhere between 0.6% and 1.6%,” said Rafael Doménech, Head of Economic Analysis at BBVA Research, in a document published on the BBVA Research website, entitled ‘Environmental Sustainability and Wellbeing’.

Doménech advocates tackling four measures against climate change that could help create more jobs and improve the wellbeing of society. A challenge that would improve the planet’s sustainability:

1.- Help society realize that short-term impact measures taken against the greenhouse effect are a sacrifice in exchange for reducing future damages, with much higher costs in terms of well-being

2.- Ensuring that countries coordinate internationally so that the income generated through green taxes is transferred to citizens in a fixed amount, regardless of their per capita income. “This will allow the most polluting activities to become aware of their actual environmental cost, while equally distributing the generated income on a progressive basis,” says the economist.

3.- Innovating and investing in green energy as a driver of economic growth.  Carbon emissions have historically been linked to per capita income levels, but for more than a decade now, it has been proven that per capita income growth can be achieved while reducing of emissions, thanks to new technologies.

4.- Financing environmental sustainability to cover the energy transition, innovation and new sustainable infrastructure.

All of this should result in a balance between taxes that addresses the risks of long-term climate change. Not surprisingly, organizations such as the International Monetary Fund (IMF) have warned that, To limit global warming to 2°C or less, large emitting countries need to take ambitious action such as introducing a carbon tax set to rise quickly to $75 a ton in 2030.

This would mean household electric bills would go up by 43 percent cumulatively over the next decade on average, while gasoline would cost 14 percent more on average.   For this reason, the IMF suggests that the revenues from the tax could be used to cut other taxes, such as income or payroll taxes that harm incentives for work and investment.

“We can turn the challenge of environmental sustainability into an opportunity to create employment and improve the wellbeing of society at large. And we have the obligation to do so thinking about future generations. The challenge is to find a balance that is socially acceptable between transition costs and the enormous benefits of a sustainable environment,” concludes Doménech.

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