Impact of Climate Change on the Economy of Canada

Attempts to measure economic benefits per se are few because more complex models and restrictive assumption are often required.

In general economic impact analysis attempts to simulate the physical change in various sector and extrapolate these to economic change using current available data.

For analysing the economic benefits of climate change in Canada we will follow the same path as well. These economic benefits can be broad and analysing all of them is not possible in this paper. However some impact will be mentioned here and then the analysis will be done focusing on one specific sector.

There are many likely positive effects on economic and financial. And if you aggregate all the overall effect is positive today.

Guardian academics discovered that perfect average temperature for national economic success is 13° C and economy benefits with every degree of warming for countries colder than this economic sweet spot.

Marshal Burke one of the world top researcher on climate change and economic productivity, published a paper, which indicated that Canada’s average national income, could increase by 247% by 2100, compare to a world where global warming doesn’t exist. (Burke, 2018)

Lower temperature means fewer winter death; lower energy costs; better agricultural yields and probably richer biodiversity. Cold is the killer.

With an increasingly changing climate, the world will turn to Canada for its natural resources. An abundance of renewable freshwater, a wealth of oil and natural gas, an expected increase in arable land and plenty of space for people to live in gives it an edge in the war against global warming.

By 2050 Canada could turn to a “global super power” (Smith, 2010)

Canada contain 7% of world’s supply of renewable fresh water. But with population, less than one percent of the world, export of water in near future can be more valuable than the 170 billion barrels of oil that are trapped in the oil sand. The going tare of desalinated water in the U.S provides very attractive pricing point for potential Canadian water export. Study calculated that Quebec source of fresh water, could reap approximately of 6.5 billion dollar annual tariff by selling as little as 10% of its fresh renewable water every year

In this paper we will follow a simple approach to measure the impact of climate change on Canada’s forest.

The contribution of forest industry to Canadian economic is well documented. The forest industry employed about 209,940 people across country (2017) including an estimated 11,565 indigenous employees (2016) accounting for about 7.2% of Canada’s total export in 2017 which generated more than 1.4 billion dollars in revenue for provincial and territorial government in 2016, contributing roughly 24.6 billion dollars to Canadas’s economy in 2017('How does the forest industry contribute to Canada’s economy? | Natural Resources Canada', 2018).This industry will be particularly sensitive to climate change, owing to Canadian geography.

Forest operation take place in all region of Canada except the far North. This area covers about 39 % percent of Canada total land area. The different climate of this regions result in vastly different vegetation and therefore very different economic. Largest part of this region is composed of permanent ice. The Ground in this region makes construction difficult and often hazardous, and agriculture virtually impossible. However within last 20 years, and specifically in the last 5 years this area has started to boom with the rest of Canada. Although it has not been on the same scale but some towns and cities have seen population increase not seen for several decades before.

Climate effects many of physiological processes in trees that ultimately lead to the production of wood. The net gain of photosynthesis depends on temperature. Length of the growing season and mineral availability are two important constrains on wood production .longer and warmer growing season may enhance productivity. The process nutrient release is reduced at the low temperature and base on that climatic warming also should accelerate the cycling of nutrient.

In analysing the economic benefits of climate change on Canadian forest it is important to determine appropriate measure of benefits and cost. Illustrating the impact of climate change that increase forest productivity using supply and demand principal.

Climate change will cause an increase in the supply of timber. This is represented on the graph. With curves S and S’ representing current and future timber supply and D representing the demand. Then the shaded area is measure the benefit from climate change.

The shift in Canadas’s supply of timber from S to S’ as result of change in climate causes the excess supply. The trade price will drop from P_0 to P_1 .With the fixed Canadian demand, this will result in an outward shift of the excess supply curve in the international market this increase will result in more revenue from international market for Canada, Also with increase in supply more jobs will be created and the industry experience a boom period. 

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