Climate Change Has Become a Significant Economic Risk All Over the World

An undersea volcano in the Kingdom of Tonga, an island located in the South Pacific, has erupted several times since January 14, triggering tsunamis that have affected the entire Pacific region. Both Internet and communication networks in this country were shut down after fiber-optic cables were damaged in the eruption. So far, three people have been confirmed dead and many others injured. Although local people have taken refuge following tsunami warnings, approximately 84,000 people, accounting for 84 percent of Tonga’s population, have been affected by the eruption and the related tsunami; in addition, more than 150 houses were damaged. The source of drinking water for 50,000 people in Tonga is no longer safe due to the widespread impact of volcanic ash; since water safety tests are continued and water purification and desalination facilities are in short supply, most people have to drink bottled water currently. What’s more, about 60,000 people in Tonga have had their crops, livestock, fisheries destroyed due to volcanic ash, seawater flooding and acid rain.
The impact of this volcanic eruption and tsunami badly damaged local infrastructures. Thus, aid workers are also coordinating the installation of communications equipment to ensure communication between the government and those affected by the disaster. Tonga’s National Disaster Response Unit and the Red Cross are assessing the influence of the disaster on the main island and other islands.
Aid from Foreign Countries
A few days after the disaster, the Chinese government, through the Chinese Embassy in Tonga, raised a batch of emergency supplies such as drinking water and food and donated them to the Tongan government. Meanwhile, the Red Cross Society of China provided $100,000 of emergency humanitarian assistance in cash to Tonga. At Tonga’s request, the Chinese government will provide some emergency supplies such as personal protective equipment and relief devices, which will arrive as soon as possible after the local airport resumes operation and flight conditions permit. The Chinese government has been following up the disaster in Tonga and is making every effort to deliver follow-up aid to help the Tongan government and residents to overcome the disaster and rebuild their homeland.
Then, two humanitarian flights from New Zealand and Australia carrying aid also arrived in the Pacific Island nation. The two large military transport planes landed at Tonga’s Fua’amotu International Airport where the runways were covered by thick volcanic ash for the past two days. According to New Zealand Foreign Minister, the plane was carrying humanitarian aid and disaster relief supplies, including water containers, temporary shelter supplies, generators, sanitation supplies, household items and communications equipment. However, the plane would not stay long as Tonga implements strict COVID-19 regulations.
Aid from international organizations
The UN Office for the Coordination of Humanitarian Affairs said assessment teams had also visited most region of the country, including remote and isolated islands. So far, five communities in Tongatapu have been identified as significant damaged. At the same time, local residents concern about water safety and groundwater quality. While the capital’s water supply is safe, most people now rely on bottled water. Until more information was available, residents were advised not to drink rainwater, which was the most important source of their drinking water before.
The World Food Program (WFP) is helping to re-establish communications, particularly telephone and Internet services, through its emergency telecommunications cluster. This organization has also launched the Responsible Giving Campaign to raise awareness of how to donate responsibly.
The World Health Organization (WHO) is particularly concerned about the contamination of water and air caused by fine ash from the eruption, and it asked people to wear face masks to prevent lung damage. Besides the lack of water, the WHO noticed that food supplies are inadequate on Ha’apai Island, where many houses and stores were destroyed; the islands of Vava’u and Ha’apai also suffer from fuel shortages. Related staff said the psychological harm was severe, given the devastation and the sight that many people witness their homes washed away by the tsunami. Therefore, the government has deployed medical personnel to the affected villages.
With about 86 percent of Tonga’s population engaged in agriculture, the Food and Agriculture Organization of the United Nations (FAO) is extremely concerned about the potential impact on agricultural sectors such as fisheries, planting and livestock. The preliminary estimation from FAO shows that 60-70% of biological assets in livestock households, most of which are pigs and poultry, would be affected negatively. Berths and ships have been severely damaged, and the coastal coral reefs and lagoons on which fisheries depend may have been damaged or contaminated by pyroclastic and tsunami debris. Since Tonga requires both short-term and long-term assistance, FAO has taken measures such as funding damage assessment and initial response measures.
Economic Risk Caused by Natural Disaster
Tonga’s economy mainly depends on agriculture, fisheries, tourism and remittances. After the outbreak of COVID-19, Tonga closed its borders in March 2020 to prevent the spread of virus, but this measure also cut off tourism which accounted for about 12% of the country’s GDP before the epidemic. The COVID-19 pandemic has already hit the tourism industry; as the pandemic causes recession in the global economy, the employment of nearly 100,000 Tongans working in New Zealand was inevitably influenced. Now a large-scale eruption of the volcano will cause great losses to Tonga’s economic development and resident’s lives.
In fact, other countries and regions have also been affected by natural disasters in different degrees. The Pacific Rim countries were also widely affected, with tsunami warnings issued for Fiji, Japan and New Zealand, many of which were lifted. But the eruption caused flooding along parts of the coasts of Alaska and California in the United States, and tidal flooding was also reported in Chile, while flights were cancelled and large evacuations were made at the time of the warning. In addition, Peru declared an environmental emergency after a giant wave from a Tongan volcano spilled oil from an oil refinery and contaminated 21 beaches in the South American country, damaging plant and animal life around 18,000 square kilometers of islands and protected fishing areas. These show the enormous destructive force of the eruption.
Owing to the Tonga disaster, an increasing number of people realize that climate change has become a significant economic risk today. In fact, island economies are disproportionately affected. This dilemma will persist because even if trade in goods picks up, tourism will remain depressed for some time.
According to the latest Global Economic Prospects report, growth per capita between developed and developing countries has gradually converged, while the economic growth of these island countries has been increasingly lagging behind that of developed countries, not only because of the recent pandemic, but also because of climate risks over the past 20 years. Maybe islands economies are considered trivial to the global economy, but signs of rising spending and falling incomes are already showing the harm of climate risk.
While international assistance is vital for small island developing States affected by natural disasters, the enlightenment of the Tongan volcano eruption is that climate-related disasters cannot be underestimated, since it is one of the chronic crises that leads to lower-than-expected growth especially in emerging developing countries.
Therefore, economist should be more proactive about feasible plans, especially for climate-change-related disasters, because preparedness is always cheaper than emergency response and the advantages are far outweigh the disadvantages.
By Xin Wang