Climate Change and Economics - Term Paper Example

Coursework: Economics Name Institution Date Table of Contents Table of Contents 2 Climate Change and Economics 2 Introduction 2 Forecasted climate change impact 4 Carbon Tax Impacts 6 Impacts of the DAP 7 Opportunities 8 Threats 9 Adaptation Strategies for Woolworth 9 Conclusion 10 List of References 11 Climate Change and Economics Introduction Woolworth Company limited entails a number of companies. It operates in both Australia and New Zealand. It has largely ventured into retail business. Apparently, in terms of market power, it dominates Australia and New Zealand. Woolworth is the biggest retailer of food and take-away liquor in Australia. It is also the second biggest retailer of food in New Zealand. The company runs the biggest poker machine, and hotel. Other chain of operations operated by the company includes; discount department stores; home improvement; and petrol stations. The company was ranked 19th among the worlds’ largest retailers in the year 2008. It currently records a pre-tax profit of $60.7 billion on sales. The net profit after taxation stands at $2,453.3 million. The company receives $195.2 cents per share. It also earns $139 cents full frank FY15 per share. Woolworth provides more than 198, 300 employment opportunities across its stores. The company is driving towards helping all its human resources achieve their goals. For instance it budgeted $32.2 million for training and development in 2013. More than 6000 if its staff is enrolled in the ostentatious ’25 year club’. The governance of the industry is performed by a board of directors. The entire board is elected with exception of the managing director and the chief executive officer. The voters comprise the shareholders of the company. For this sake, the board is accountable to the shareholders. It offers strategic solution for the Woolworth Company. It also defines mandates and responsibilities to various managerial departments. This is strictly within the official delegation framework. Several committees have been developed by the board. This include; nomination committee; audit, risk and compliance committee; people policy; and sustainability committee. The issue of climate change is likely to affect the company’s operation. It will further be affected by new policies to be implemented in Australia. Forecasted climate change impact Climate change can lead to extreme environmental events (Will, 2009). Global warming can increase temperatures and glaciations. The sea level will rise and can result to flooding of the coastal regions. There can be incidents of elongated rainfall seasons which can result to flooding. Unpredictable ENSOS can also result. Alternatively, other regions may experience drought. All these events affect food availability and human health. These events stretch further to affect economic activities. For instance, the agricultural and food industry will be adversely affected. Extreme events may include; extreme high or low temperatures; uncertain precipitation patterns; floods; droughts; wild fires; and cyclones. Climate change affects the economy from all fronts. This include; energy, agriculture and transport (Anita et al, 2010). Woolworth is a retail company. Climatic changes will affect the entire chain of activities. This will include; the producer, wholesaler, retailer, supplier and consumer. Food retailing is one of the major products of the company. Agricultural sector is bound to be greatly affected (Will, 2009). Adverse climatic conditions will thus affects food production. Biodiversity and water availability are also affected. Unpredicted changes in precipitation disrupt crop farming (Steffen et al, 2009). Biodiversity is one of the major influencers for agriculture. Elongated dry droughts can lead to loss of biodiversity (Doering, 2002). Climate change has effects on various ecosystems across Australia. Climate change affects snow cover. According to (Will, 2009), the Alpine region will receive 25% less rainfall by 2030. Consequently temperature will rise to 10 C. Since 1960 to date, the region’s snow cover has reduced by 10%. This will affect the species survival in this region. Uneven competition will be evident between species of both flora and fauna. This will in turn jeopardize biodiversity. Biodiversity is one important factor for food security. Many communities depend on this. This can have both negative and positive impact to Woolworth Company. Lack of food can increase sales in Woolworth food outlets. On the other hand it can reduce food supply in its retail outlets. Climate change can adversely affect agriculture in Australia. Climate change is an important determiner in shifting of seasonality (Anita et al, 2010). Changes in rainfall patterns will be evident. Other regions will receive rainfall more often than others. Climate change can influence spread of crop pathogens and pest. This can compel farmers to switch to chemical control methods. Integrated pest management will be more expensive and labor intensive (Gillespie and Burns, 2006). It is expected that production in the dairies will significantly fall. In case of increased precipitation, other environmental impacts will result. There would be; increased runoff; disruption of field crops; and consequently soil depletion. According to Doering (2002), there can be time variability in the first and final frost. This can lead to loss of crop. Drought events may demand for investments for irrigation systems. On the other hand, other regions may benefit. Elongated seasons for growing can boost food plantation and hence boost productivity. Farmers can alternatively invest in more resistant crops. Generally most agricultural sectors will incur more cost of production (Dunnington, 2010). This will increase prices. These impacts on agriculture can affect Woolworth operations. Supply of food in its retail stores will be affected. Low food production will lead to low supply of food in Woolworth outlets. Alternatively, Woolworth can use its financial power to import cheap food. This can be maximizing its profit and increase on sales. Climate change can also affect human health. Increased global warming can affect human negatively. Increased temperatures can result to heat stress and dehydration. This might affect the occupational health and safety of Woolworth employees. The company may be forced to invest more in technology to condition these environments. The company can resort to installation of air conditioners. High temperature can also increase incidences of mosquitoes. This may consequently increase malaria incidences (Spicket et al, 2014).). This can make Woolworth workforce vulnerable to malaria epidemics. The company may be forced to invest more in health funds to maintain a healthy workforce. This can alternatively create a business opportunity for malaria control and prevention. Food availability is also an important aspect in human health (Steffen et al, 2009). Good health requires a wide range of supplementary food. If change in climate will affect food prices and availability, the human health will be affected. A range of health issues related to diet will result. Farm chemicals can also be slow toxicants. Some can be carcinogenic to cause cancer. These impacts on health can affect Woolworth workforce. It can also present a business window for opportunity. A range of health issues will increase the cost of livelihood. This can pile pressure on Woolworth to increase the income of its employees. Carbon Tax Impacts Carbon tax imposes a levy on the use of fossil fuel such as petrol which increases the prices of petroleum products. Woolworth’s petrol stations will be directly affected incase customers opt for substitute products that are renewable. The tax will also affect the prices of commodities whose parent factories are levied. It can prove to be an obstacle to Woolworth business prospects. On the other hand, some advantages can emerge through this taxation. Renewable products may prove to have more advantage in business than the non-renewable ones. Financial ground might disadvantage competitors leaving Woolworth in the market. Impacts of the DAP Australia has for many years been on the forefront to prevent global warming. The country has portrayed political will to develop policies to counter global warming. The climate change policy has been replaced by the direct action plan. The former involved a series of programs aimed at promoting green investments. The direct action plan is currently the proposed government policy. It is also aimed at direct approach to cut on CO emissions and upgrading the environment. The policy on change of CO emission has various areas of concern. These areas may affect the operation of Woolworth Company. Use of renewable energy will affect the petrol business run by the company. This is as a result of companies being encouraged to venture into CO free products. Diversity of products can increase income opportunities for Woolworth Company. There will be an expansion in innovation capacity within the company. There is also an energy saving scheme for the state. This scheme obliges energy dealers like Woolworth to establish energy efficient models. There is an established energy reduction fund. This fund will affect the energy sector. It threatens the upward trends in the gas sector developments. The gas sector can source funds to implement green projects. In addition the emission reduction fund will establish and bid for emission reduction at a cheaper cost. This emission reduction should have direct positive influence green house gas sources in Australia. The fund is structured to ease participation for companies like Woolworth (Cotton Australia, 2013). The government believes that this will enhance take-off of the new policy. Companies will have to develop energy efficiency in all their operation. The ERF funds create an opportunity for companies to exercise social responsibility (IUCN, 2015). The transport sector will also have to cut down the emissions. Woolworth has retails that deal in drinks and food. This often requires refrigeration as a preservation method. Thus the company is required to develop clean technology in refrigeration. The use of chlorofluorocarbons will be wiped out (World Bank 2014). Opportunities Climate change and the direct action plan can create business opportunities for Woolworth Company. In the Agricultural sector, climate change presents more investment opportunities. Woolworth can venture into retailing irrigation equipments and greenhouses. The company can also invest in pesticides for the sake of chemical farmers. Woolworth can alternatively import cheap food from other countries. This will cut on the expenditure on expensive local food. It will also reduce or eliminate uncertainty in food supply. The issue of health also presents a lucrative opportunity. Woolworth can grab this chance and venture into pharmaceutical chemist retailing. This can broaden the scope of profit avenues for the business. The company can also venture retailing commodities such as air conditioners. The direct action plan also has opportunities up for grabs. Woolworth Company can venture into project research. This can enable the company bid for Energy Regulatory Funds. With a successful bid the company will sign a contract to purchase emission reduction. Threats Climate change has the potential to pose a threat to Woolworth’s operations. Some extreme conditions like flood and rains can cause flooding. Flooding will in turn be a barrier to road transport. This will affect movement of goods to and from its retail outlets. In addition, if agricultural sector is affected, food supply affected. This may result to escalating food prices down the supply chain. The company may result to importation. However there may be uncertainty in the true cost of this action. There can be also emergent threats of new firms. New firms can develop new ideas to solve the current problem. This can jeopardize some activities of Woolworth Company. Emergence of health related issues can be costly to Woolworth Company. This can be due to loss of human resource. It can also manifest in terms of health insurance related cost. Such scenarios can count as losses in the long run. The current direct action plan also poses threats to Woolworth Company. For instance, some of Woolworth products might be discouraged. This includes products with CO like from the petrol station. The company may be forced to wipe out some of its supply chain. This can add up to losses. The company will also be required to exercise social corporate responsibility. This involves some costs to the company. Adaptation Strategies for Woolworth The management entire management of Woolworth will have to develop strategies to cope with the new policy. Investing in quality research will help the management identify the product to invest in. new products can also be developed through research. Environmental training of staff will be necessary for the company to remain in operation within the legal framework. Woolworth should embrace new technology especially in the energy sector in order to remain relevant in the market. Innovation and creativity should be sorted and guarded by the management especially a technology that can create eco-friendly products. Social corporate responsibility towards environmental protection will be necessary. This will maintain the reputation and significance of Woolworth. Conclusion Climate change is a current global issue and if not well handled it can affect various aspects of the economy and even human health. Climate change can affect food production as well as biodiversity. Climate change can propel for drastic reactive policies. Woolworth Company is a company venture in Australia and New Zealand. Climate change related issues may affect the operations of this company. The Australian government is trying to cushion such negatives through repealing of the old climate change policy. The government has in turn developed a direct action plan. Both the aspect of climate change and the new policy provide threats and opportunities. This can have positive or negative impact to Woolworth Company. However, it strongly depends on the magnitude. List of References World Bank, 2014, State and Trends of Carbon Pricing. World Bank Publication. IUCN Environmental Law Center & IUCN World Commission on Environmental Law, 2015, Ethics and Climatic Change: A Study of National Commitments. Glad. IUCN. Will, A., 2009, Australia Biodiversity and Climate Change. Victoria. Csiro publishing. Steffen W, Burbidge A.A, Hughes l, Kitching R, Lindenmayer D & Musgrave W., 2009, Australia Biodiversity and Climate Change. Victoria. Csiro Publishing. Gillespie A & Burns W.C.G., 2006, Climate Change in South Pacific: Impacts and Responses in Australia, New Zealand and Small Island states, New York City, Springer Science and Business Media. OECD, 2014, Climate Change, Water and Agriculture: Towards Resilient Systems, IWA Publishing, London. Anita W, Dominic M & Neil A., 2010, Climate Change and Agriculture Impacts, Adaptation and Mitigation: Impacts, Adaptation and Mitigation, OECD publishing. Doering O.C., 2002, Effects of Climate Change and Variability on Agricultural Production SSystems. New York City. Springer Science and Business Media. Dunnington G., 2010, Climate Change Adaptation White Paper Series: The Potential Impacts of Climate Change Adaptation on Wildlife, Internet source retrieved on 25-09-2015 Spicket J, Brown H, & Katscherian D. (2014). Health Impacts of Climate Change: Adaptation Strategies for Western Australia. Internet source retrieved on 25-09-2015 Cotton Australia (2013). New Government Policy: Scrapping the carbon tax and implementing the Direct Action Plan- Briefing Paper. Internet source retrieved on 25-09-2015 from Read More