The impact of climate change and environment on economy and business

This article introduces a technique for evaluating the overall economic impact of climate change, with a specific focus on the shift from carbon-intensive production to a more environmentally friendly economy. The approach takes into account the long-term economic costs of climate change and calculates how investments aligned with the Paris agreement can affect macroeconomic conditions. By considering country-specific commitments and global economic costs, an optimal investment amount is determined. The study also defines the timeframe for these investments, the proportion contributed by the public sector, and the effectiveness of such investments in estimating economic growth. To illustrate its effectiveness, the method is applied to China, the US, and the Euro Area, demonstrating that a well-planned transition can bring positive economic benefits and that economies generally have resilience against some ineffective investments. However, if the transition is rushed, disorganized, or lacks private sector involvement, it can lead to significant negative economic consequences. This methodology provides valuable insights into understanding the risks associated with macroeconomic transitions in response to climate change.