Melting polar ice caps? The weather getting hotter and more unpredictable? Here’s how climate change could be affecting your finances!

According to scientists at NASA, average global temperatures on earth have risen by at least 1.1 Celsius since 1880, with the majority of the warning occuring after 1975. As such, on 12 December 2015, 196 representatives from almost all the countries on earth, agreed to adopt the Paris Agreement to limit and mitigate the effects of global warming.

Climate changes of this scale, have major consequences for the inhabitants of this planet and also people’s finances. These impacts on people’s finances are not directly felt by most people as many have focused on the impact of climate change on the environment we live in.

Why should this matter to us? Here are six ways climate change is affecting your finances today and in the future!

#1: Higher Electricity Bill

Do you think your electricity bills are high now? As global temperatures continue to rise and the weather gets even hotter, you could be spending more of your money to cool yourself down.

With higher demand for electricity, this makes a vicious cycle even worse as more electricity means more fossil fuels are burned, thereby depleting fossil fuels faster (prices will go up) and the act of burning increases greenhouse gas emissions (temperatures rise even more).

As mentioned before, average temperatures on Earth have risen by at least 1.1 Celsius since 1880 and temperatures are expected to climb higher in the foreseeable future. By 2100, some scientists have projected that temperatures could rise by as much as 5 Celsius, a fivefold increase compared to the 1.1 Celsius increase over the last century.

Does 1 Celsius make a big difference? Try asking your older friends or parents about how bitingly cold Cameron Highlands and Genting Highlands used to be in their younger years. Even going to Fraser’s Hill, Maxwell Hill, or Penang Hill used to be mean preparing oneself with thick clothing. Compare that to how you feel today when you visit these places.

#2: Damage to Property / Physical Assets

Did you remember the last time your car was stuck in a flash flood in the city? Or when your house was flooded with water from the monsoon season? As global temperatures increase and climate changes, floods and severe storms are becoming more commonplace in the world and also Malaysia.

According to the World Meteorological Organisation, the number of disasters rose by a factor of five from 1970 to 2019, costing damages of US$203 million per day. The once in 100 year floods in some Malaysian cities at the end of 2021, hits close to hoem for many of us.

WhatsApp and Instagram pictures and videos of cars being submerged half-way and people wading through high water levels in their houses, are big reminders to the potential damage we need to prepare our finances for in the coming years.

#3: Higher Insurance Premium

Your insurance premium could be on an increase too due to climate change. As more people seek protection for property damages, insurance premiums are expected to increase in line with the higher demand for such insurance.

As more natural disasters occur, insurance companies would also have to raise insurance premiums to compensate for the higher risks in the environment. Swiss Re in its report on property insurance, forecast that insurance premiums to increase by 22% by 2040 due to weather-related catastrophes.

Furthermore, climate change also affects your personal health. Rising temperatures could increase the number of heatstrokes for people working outdoors, the spread of infectious diseases such as Lyme, and other diseases such as respiratory and mosquitoes-related ones. Insurance premium in this regard, could also increase for people who are more exposed to these risks.

#4: Higher Government Tax

How do you pay higher tax because of climate changes? This probably doesn’t sound intuitive. When you see potholes on the road or broken electricity lines, you are probably thinking the government should come in and repair these damages.

That is exactly how you might be paying more taxes in light of climate change. In a nutshell, governments would have to fund all these repairs, and they do so with taxpayers money. When storms and floods happen more frequently, basic infrastructures are damaged more frequently and governments would have to spend more money to repair them.

In Kuala Lumpur and Selangor, flash floods are so common that governments are spending more money to repair and upgrade drainage systems. In hotter temperatures, roads are exposed to the risks of melting and expansion which worsens the condition of the road.

#5: Loss in Income or Job

Climate changes affect people working in the eco-tourism and agriculture sectors in a more pronounced way.

In eco-tourism, coral reefs in Malaysia are under threat with the East Coast Marine Parks estimated to be worth RM7.8 billion in economic value. Remember the guide and the captain of the boat that brought you to that coral reef spot in Redang? They might be out of a job soon.

In the agriculture sector, more uncertain weather conditions such as droughts and floods could be negatively impacting the yields of agricultural products in Malaysia. The agriculture sector accounts for about 7.4% of GDP in Malaysia, while employing about 10.3% of the workforce. Remember that auntie who was selling vegetables at the market? She might be out of a job soon too.

People working in these sectors could find themselves out of a job if climate change continues to worsen moving forward.

#6: Higher Cost of Living Especially Food

As mentioned in #5, agricultural yields could decline with climate change. Essential food products could be in short supply and hence, more expensive for most of you. Already, in 2022, Malaysians have suffered the brunt of high food prices as the Russia-Ukraine conflict raised global food prices such as wheat and soybean. This had the effect of raising chicken prices in Malaysia.

Most of our vegetables are actually produced in Cameron Highlands and they require a colder climate to grow. With temperatures rising, these vegetables might not grow that well and that causes a shortage. With shortages, you might be paying a higher price for your vegetable produces.

Conclusion

What can we do then about climate change? For many of you, you might be wondering whether you can even do anything as an individual to solve the climate change problem.

Great changes come not by one person doing a great deed but by many people doing small deeds. You can start with trying to lead a more sustainable zero-waste lifestyle. Zero Waste Malaysia is holding a 30-day challenge in October 2022, where you can sign up and do your part in reducing your carbon footprint.

Through this, you can build up sustainable habits in reducing waste in the environment and hopefully, with more and more people adopting such a mindset, the climate change problem can be a thing of the past.

 

Worried about climate change? Let us know in the comment below on your concerns or sign up for the 30-day zero waste challenge!

You May Also Like