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Effect of Global Warming on Businesses


Effect of global warming on industries such as tourism, insurance, and automotive will be taken up for study and analysis in this paper. Global warming is one of the most burning issues that warrant public and private sectors’ attention. This paper will argue that global warming has negatively affected the prospects of the above-mentioned businesses.

Tourism and global warming

Tourism has been affected by climate changes phenomena such as sea level and temperature rise contributing to flood and drought condition in the tourist destinations. (Climate Change 7) Tourism industry requires the maintenance of constant temperature. Erratic and unpredictable temperature and sea level changes have drastically affected tourism industry as the tourists are not inclined to visit those places affected by floods and droughts because tourists are afraid of their safety in the tourist destinations. Obviously, this has reduced the tourists’ visits to those places affected by adverse climate changes, a result of global warming. Unless immediate actions are not taken to minimize global warming, tourism industry is going to suffer further reverses.

Coastal zones and mountain regions are the two important tourist spots that are affected by global warming. (Climate Change 8) Climate changes have affected coastal zones due to increased sea level affecting the beaches since the tourists refuse to visit those places dangerous to their lives. (Climate Change 8) Tourist spots in the mountains also will be affected by global warming due to the reduced winter season. (Climate Change 8)

This will encourage the tourists to search for other destinations in order to spend their time during the winter. Already, tsunami and hurricane incidents have created fear in the minds of the tourists. Therefore, tourists would prefer to go to the places that are considered safe and unaffected by global warming. Most of the international travelers who visit various tourist destinations in Europe and North America are leisure-based tourists since they like to spend their leisure time by visiting important tourist destinations. (Climate Change 22) Climate changes in these places would affect leisure-based tourism since tourists need favorable climate to visit various tourist destinations.

According to a study sponsored by World Wide Fund for Nature (UK) global warming would affect various tourist places in the countries such as Maldives, the European Alps, the eastern Mediterranean, southern Spain, Scotland, the European lakes, South and east Africa, Australia, Florida, and Brazil. (Kirby 1) One needs to note that these are the most important tourist destinations with thousands of tourists visiting these places.

Problems such as increased temperature levels, heat waves, unexpected floods, forest fires, and diseases are going to affect the revenue of these tourist destinations. (Kirby 1) This is because tourists would not like to visit places affected by rising temperature. Instead, they would prefer to stay at home since it is more comfortable back home rather than risking ones’ life and comfort. For example, in the case of the Mediterranean, temperature is expected to reach 40 degree centigrade. (Kirby 1)

Such rise in temperature will reduce the interest of the tourists in such destinations. This will affect the revenue of some tourist destinations. This will affect travel agents, restaurants, lodges, and government establishments that spend huge amount of money to cater to the needs of the tourists. This implies that people would be forced to visit places that are not affected by global warming or that are safer tourist spots.

It is estimated that tourism accounts for nearly 50 percent of traffic movements. (Environmental 1) This implies that large numbers of tourists have been visiting different destinations. They need the assurance that global warming would not affect them, but it is not possible to give assurance to tourists in this regard because many tourist places have suffered the problem of natural calamities such as floods and droughts affecting the tourism industry.

A few tourist spots are affected with rising temperature. For example, many Asian tourist spots will lose tourism revenue on account of increased temperature and many other climate changes. (Environmental 1) Therefore, attempt should be made to reduce global warming in order to protect the tourism industry.

Diseases are the major problems that tourists may face in an alien land. (Environmental 1) For example, studies have proved that malaria has reemerged in Spain. (Environmental 1) It is possible that in many other tourist spots such diseases may emerge. Floods and hurricanes can result in accommodation problems. Global warming can destroy the natural resources like forests resulting in less rainfall and other problems associated with climate change. Such developments will result in reduced tourist inflow to the earlier major tourist destinations. (Environmental 1)

Insurance industry and global warming

Insurance industry has a major role to play in the era of global warming. This is because insurance industry is expected to suffer reverses due to increased insurance claims on account of losses to the insured men and material. Global warming will contribute to increased number of diseases who need to be hospitalized for long duration and there will be increase in human casualties. This has awakened the insurance industry leaders and they have already expressed their alertness to this problem.

For example, it is found that there is increasing incidence of asthma due to the “ragweed pollen growth”. (Britt 1) West Nile virus has emerged due to the recurrence of floods. (Britt 1) Such diseases will increase the costs for insurance companies since there will be increase in the number of claims. Insurance companies earn profit when there are less number of claims and large numbers of insurance holders. Due to global warming, people will be forced to ask for greater compensation in order to cover their losses.

Insurance companies expect that the government and non governmental organizations take appropriate measures in order to avoid severe losses to them. Already insurance companies have taken greater risk of guaranteeing compensation for material and human losses. Although the insurance companies can set terms and conditions in order to save their business, the consumers may not like such terms and conditions that deny insurance claims. Such developments will reduce the numbers of people opting for insurance policies. (Brit 1)

Insurance companies have realized that they need to take action against the increasing menace of global warming. This is because they are being directly affected by climate change and other developments. Companies such as Marsh, AIG, and Fireman’s Fund have already issued warnings that global warming would eat up their profits.(Gunther 1) These firms have commissioned economists to study the impact of global warming on insurance companies.(Gunther 1)

The studies have revealed that global warming would contribute to reduced profits to the companies. Now no one doubts the reality of climate change. Scientific studies have proved that global warming has emerged as a major threat to the global economy. (Gunther 1) Insurance companies have introduced new products or changed their terms and conditions while issuing policies. For example, one insurance company has introduced the term “pay-as-you drive”, which implies that insurance premium depends on the usage of cars. (Gunther 1)

Another insurance company has refused to insure houses on the coastal regions due to the fear of flood. (Gunther 1) Although this is not an effective strategy, insurance companies are compelled to take such extreme actions in order to avoid losses. Obviously, such policies are not going to increase the popularity of insurance firms. The insurance companies are giving education to the consumers regarding the method of avoiding disasters in order to avoid large numbers of insurance claims. (Gunther 1) There are sufficient evidences to state that insurance companies have been negatively affected by global warming.

Hurricane Katrina is one of the major events that showed the economic problems associated with global warming. This event has forced the insurance companies to change their terms and conditions. Private insurance companies have refused to insure particular materials due to the fear of losses. A few private companies have already closed down their businesses as they failed to withstand the losses. (Insurance Companies 1)

In the year 2004, insurance companies have suffered losses of nearly $30 billion. (Insurance Companies 1) Apart from this loss, they have suffered losses due to routine claims as well. This implies that insurance companies and the government authorities are ill prepared to meet the global warming challenge. Already insurance companies are increasing their premium rates every year making some insurance products unaffordable. (Insurance Companies 1)

In the forest and coastal regions insurance companies have refused to compensate losses due to floods and forest fire. This has reduced the number of people who would like to insure themselves and their properties. Increased numbers of restrictions imposed by the insurers on the insured people has forced consumers not to renew their old policies.(Insurance Companies 1) There is a need for public – private partnership in order to find the methods of reducing the impact of global warming on the insurance industry. (Insurance Companies 1)

Climate change, a result of global warming, certainly affects the insurance industry. This is because any human or material loss will affect this industry reducing its profits. For example, it is found that people are dying due to heat waves. (Booth 14) Insurance companies need to find an alternative to the losses suffered due to natural disasters. Although investment in carbon emissions trading is expected to help the insurance industry to recover the losses, one has to study the real profit that the insurance companies gain out of this new investment. (Booth 17) It is apparent the insurance firms are not prepared to face the challenge of global warming and they have lost the direction.

Above details imply that insurance companies have been suffering severe losses due to their inability to adjust with the problem of global warming. It is important for the companies to find ways of reducing the loss of revenue due to global warming.

Automotive industry and global warming

Automotive industry, producing automobiles, is another sector severely affected by global warming. Car manufacturers are considered as being responsible for global warming. (California sues 1) Thousands of cars are being produced every year. They have emitted carbon dioxide, which contributed to the climate change and other products of global warming. (California sues 1) Therefore, car producers are expected to reduce carbon emission and introduce new technology. This has increased the financial burden of car manufacturers.

California State has filed a law suit against the major car producers such as Ford, Toyota, and General Motors since their vehicles have been the major source of carbon emissions contributing to global warming and resulting in heavy losses to the government. (California sues 1) The government, in its law suit, has asked for compensation of millions of dollars since the cars manufactured by these companies have caused huge losses to the state government. This is not the first law suit filed against the car manufacturers. (California sues 1)

This implies that this is not going to be the last court case against the automotive industrialists. This has sent negative signal to the US automotive industrialists since in the future they can be questioned for their lack of sensitivity to environmental issues. The auto makers have claimed that already they have introduced major innovations in their products leading to less carbon emissions.(California sues 1) At the same time, car makers are trying to hike their car sales through aggressive marketing. This has resulted in increased car sales contributing to global warming. The law suits and demand for changes in technology would eat up the car makers’ profits. Therefore, global warming will affect the future business prospects of automotive industrialists. (California sues 1)

New kinds of fuels such as hydrogen and bio diesel have been invented, but they are not being used by large numbers of car users. There is a need to produce hybrid cars. (Larkin 48) Environmentalists aver that car manufacturers have been responsible for the increased negative effects of global warming. This has pressured the automotive industrialists to introduce measures to reduce emission levels. (Larkin 48) One change introduced by the car manufacturers is to replace iron products with aluminum ones since by using the latter it is possible to save precious fuel. Aluminum products are expected to increase fuel efficiency and reduce emissions. (Larkin 48)

In the current age of global warming, it is important to preserve fossil energy. According to a recent report aluminum has become an important component used by the car manufacturers. (Larkin 48) The government, obviously realizing the threat of global warming, has issued stern warning to the auto makers to introduce innovations so that automotive industry does not contribute to global warming. (Larkin 48) Similarly, electric cars have been invented after investing huge amounts of money. In the future, the automotive industrialists would face much greater financial burden due to increased global warming. It has been scientifically proved that global warming has come to stay in this world and there is need for huge investment in order to protect the automotive industry.

Automotive industry is also facing the problem of the future legislations that aims to increase fuel efficiency. One such legislation has proposed that the automakers need to enhance fuel efficiency by 4 percent. (Thomas 1) Auto makers agree that they need to do something in order to reduce the impact of global warming, but they fear that they cannot bear too much financial burden and they need the government support. (Thomas 1)

The American federal and state governments have blamed auto makers for not introducing technological innovations so as to reduce carbon emissions. (Thomas 1) Such criticisms will have negative impact on the automotive industry. Demand of greater fuel efficiency may require huge investment in addition to loss of thousands of jobs. (Thomas 1) Therefore, global warming is going to negatively affect the automotive industry.


Global warming has negatively affected tourism, insurance and automotive industries. Tourism has been affected due to sudden rise in temperature, fluctuations in the sea level, and changes in the rainfall pattern. Tourists are expected to change their destinations due to climate change. Insurance industry has already suffered huge losses due to natural disasters, a result of global warming. Insurance firms have substantially hiked their premium rates and refused to insure people and buildings on the coastal zones. Automotive industrialists have been called upon to introduce innovations in car manufacturing technology, which require huge investment. Therefore, global warming has affected the three major industries mention above.

Works Cited

Booth, Carry. “A climate of fear.” Reactions 24.7 (2004): 14-17. Business Source Elite

Britt, Robert Roy. “Insurance Company Warns of Global Warming’s Costs”. Live Science. November, 2005. Available Online. April 25, 2007. https://www.livescience.com/environment/051101_insurance_warming.html

“California sues carmakers over global warming”. September 20, 2006. Msnbc. Available Online. April 26, 2007. https://www.msnbc.msn.com/id/14924286/

Climate Chang and Tourism. Proceedings of the 1st International Conference on Climate Change and Tourism, Djerba, Tunisia, 9-11 April 2003. World Tourism Organization.

“Environmental Impacts of Tourism at the Global Level”. UNEP. 2002. Available Online. April 25, 2007.

Gunther, Marc. “Insurance companies take on global warming”. Fortune. August 24, 2006.

“Insurance Companies Staggering Under Global Warming Damages”. Environment News Service. September 13, 2005.

Kirby, Alex. “Global warming threatens tourism”. BBC News. Sunday, August 29, 1999. Available Online. April 25, 2007. https://news.bbc.co.uk/1/hi/sci/tech/431935.stm

Larkin, John. “Automakers increasingly turn to aluminum to improve.” Automotive Industries 186.3 (2006): 48.

Thomas, Ken. “Auto industry leaders discuss climate change with Congress”. March 14, 2007. NCTIMES.com.