Tristan G.

Gatchalian April 28, 2017

10-100428 / BIT 3F-G1 Economics

Economic Impact of Climate Change in the Philippines

I. STATEMENT OF THE PROBLEM:

Given the inherent nature of economic forecasting, which involves significant degrees of

uncertainty, estimates of the results of global warming over the 21st century have varied widely.

Many analyses, have predicted reductions by several percent of world gross domestic product

(GDP) due to climate related costs such as dealing with Global warming. Other studies by

independent economists looking at the effects of climate change have found more ambiguous

results around the range of net-neutral changes when all aspects of the issue are evaluated.

It took more than 20 years to broadly accept that mankind is causing global warming with

the emission of greenhouse gases. The drastic increase in the emission of CO2 (carbon dioxide)

within the last 30 years caused by burning fossil fuels has been identified as the major reason for

the change of temperature in the atmosphere.

At the global scale, the around 65% of the key

greenhouse gases are CO2 emitted are from fossil fuel used

in industrial process. Global greenhouse gas emissions can

also be broken down by the economic activities that lead

to their production. As seen on the graph by Environmental

Protection Agency (EPA), majority of the gasses are byproduct

Greenhouse
Gases Emitted by
of industrial production such as use of electricity and heat production,
Economic Sector

industry, transportation, agriculture, forestry and other land use of the economic sector.
 Climate change impacts can be measured as an economic cost. This is particularly well-

suited to market impacts are linked to market transactions and directly affect GDP. In a literature

assessment, climate change would increase income inequalities between and within countries. A

small increase in global mean temperature would result in net negative market sector impacts in

many developing countries such as the Philippines.

The Philippines is an archipelagic country where agriculture plays a vital role in providing

around 30 percent of employment and 10 per-cent of the countrys total gross domestic product

(GDP) per year. Recent natural disasters significantly affected crops and livestock resulted to

severe loss in agricultural production including human lives. Climate change worsens the

economic situation and food security among others of the Philippine people.

II. FACTS AND FIGURES:

The Economy of the Philippines is the 36th largest in the world, according to 2016

International Monetary Fund statistics. The Philippines is considered a newly industrialized

country, which has an economy transitioning from one based on agriculture to one based more

on services and manufacturing. It is currently one of Asia's fastest growing economies. However,

major problems remain, mainly having to do with the economic growth of the country is being

slowed down by a challenge that is felt globally, the climate change.

Global warming refers to the increase of the Earth's temperature. It happens when the

greenhouse gases trap heat and light from the sun in the earths atmosphere. In the Philippines,

global warming has become a big challenge. It changes the course of the government, economics,

and most of all, it greatly affects the environment. The effect on the worlds climate from

increasing temperatures could be just as devastating. Floods, droughts, and increasing sea level

are some of the effects of global warming that is currently happening in the Philippines.
 Global warming creates uncertainties for the Philippine's economy. Disasters brought

upon by global warming derailed economic development of the country. Soaring food prices is

one of the ill effects of global warming to the Philippine's economy. Food price inflation severely

stresses the most vulnerable groups. It may have seriously eroded their purchasing power,

increasing the severity of food deprivation and malnutrition.

III. ECONOMIC PRINCIPLE:

PRINCIPLE 7: Governments Can Sometimes Improve Market Outcomes

One reason we need government is that the invisible hand can work its magic only if the

government enforces the rules and maintains the institutions that are key to a market economy.

Most important, market economies need institutions to enforce property rights so individuals can

own and control scarce resources. We all rely on government-provided police and courts to

enforce our rights over the things we produceand the invisible hand counts on our ability to

enforce our rights.

Yet there is another reason we need government: The invisible hand is powerful, but it is

not omnipotent. There are two broad reasons for a government to intervene in the economy and

change the allocation of resources that people would choose on their own: to promote efficiency

or to promote equality. That is, most policies aim either to enlarge the economic pie or to change

how the pie is divided.

As we will see, one possible cause of market failure is an externality, which is the impact

of one persons actions on the well-being of a bystander. The classic example of an externality is

pollution. When the production of a good pollutes the air, and creates health problems for those

who live near the factories, the market left to its own devices may fail to take this cost into
 account. In the presence of externalities or market power, well-designed public policy can

enhance economic efficiency. In practice, many public policies, such as the income tax and the

welfare system, aim to achieve a more equal distribution of economic well-being.

IV. SOLUTION TO THE PROBLEM:

With the threat of climate change, the international community created the Paris

Agreement which aims to stop global warming and preserve the environment for our future

generations. The international community is rightfully geared towards promoting economic

growth within the context of sustainable and environment-responsible development. With the

Philippines being a signatory to the Paris Agreement, the country has followed-suit with the rest

of the international community through the enactment of RA No. 10771.

RA 10771 known as the Philippine Green Jobs Act of 2016 is the declared policy of the

state to: affirm labor as a primary social economic force in promoting sustainable development;

afford full protection to labor, local and overseas, organized and unorganized, and equality of

employment opportunities for all; and promote the rights of the people to a balanced and

healthful ecology in accord with the rhythm and harmony of nature. It is an enacted law

promoting the creation of green jobs or employment activities that contributes substantially to

preserving the quality of the environment, be it in the agriculture industry or service sector.

The state shall identify needed skills, develop training programs, and train and certify

workers for jobs in a range industries that produce services for the benefit of the sustainable

development of the country and its transition into green economy. Business enterprises are

encouraged to not only hire employees skilled in preserving environment, but also train or

educate their current employees. They are also encouraged to conduct research so as to reduce

the environmental impact to their operations. In this regard, we may then expect PGJA to lead to
 a redefinition of many jobs across range of sectors and also gradually contributes to solve the

problem with the climate change.

V. CONCLUSION AND SYNTHESIS:

Indeed, climate change is a complex problem that requires a multitude of solutions. And

in order to achieve an effective solution, it must be always anchored on sustainable development.

Global Warming has become a challenge to the Philippines. It affects the country's economy,

agriculture, and especially the people particularly the poor. Fortunately, many response measures

to climate change move towards achieving other important objectives, including infrastructure

goals, disaster risk reduction and mitigation objectives, food security concerns, energy

development and independence, biodiversity conservation, and laws such as RA10771 promoting

green jobs in the country. Government intervention truly helps and greatly contributes in the

market outcome thru laws and programs that benefits the economy of the country.

VI. REFERENCES:

Principles of Economics: Seventh Edition

N. Gregory Mankiw, Cengage Learning, 2014

Republic Act No. 10771 | Official Gazette of the Philippines

www.gov.ph/2016/04/29/republic-act-no-10771/

New law to create green jobs | Official Gazette of the Philippines

www.gov.ph/2016/05/10/law-creates-green-jobs/

BusinessWorld | Green Jobs: Greening the Philippines

www.bworldonline.com/content.php?section=Opinion

Economic Impact of Climate Change

en.wikipedia.org/wiki/Economic_impacts_of_climate_change

The Main Cause of Global Warming

timeforchange.org/main-cause-of-global-warming-solutions

Global Greenhouse Gas Emissions

epa.gov/ghgemissions/global-greenhouse-gas-emissions-data