Principle of Economics Report

This report examines the impact of climate change on the travel and tourism industry and the building and construction services, analyzing both microeconomic and macroeconomic factors. It explores how changing weather patterns affect demand, supply, prices, and production in these sectors, and discusses the broader economic implications, including GDP, inflation, and unemployment.

Principle of Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Micro and macro economic impact of the climatic changes on the service industry.........1
Travel and the tourism industry is been highly influenced by the change in the climatic
conditions in the overall economy. ........................................................................................1
2.Building and Construction services.....................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES ...............................................................................................................................4

INTRODUCTION
The present report is a brief form the minister over the effect on two of the services. The
services taken are travel and tourism services and the building and construction services by
climatic changes. The impact is determined in aspect of micro and macro economics factors on
this services.
1. Micro and macro economic impact of the climatic changes on the service industry.
Travel and the tourism industry is been highly influenced by the change in the climatic
conditions in the overall economy.
Micro-economic impact- Due to the changes in the weather conditions the demand of the
tourist gets affected to a large extent as the volatility in the weather increases the risk in terms of
the infrastructure. It also results in increased cost, mainly in respect of the fuel which leads to the
corresponding erosion in the demand of the consumers. Climatic change results in delay and the
shifts for longer term in travelling that will directly affect the destination value. For instance-
heavy rainfall can lead to floods and indirectly affects the travel and the tourism industry as the
demand of the customer for travel reduces (Argy, 2013). The prices of the packages also gets
affected to a great extent as the services of this industry depends upon the climate and the
holiday. Favourable climate and in holiday time, the prices for the services provided by the
industry is high while in off season, the prices are low with the discount offers.
Macroeconomic Impact- the gross domestic product of the economy gets highly affected
as the climatic changes poses the risk to the future growth in the economy and also to political
stability of the countries, this leads to a reduction in the GDP (Cross and Poon, 2016).
Moreover, due to this decline in the GDP because of the climatic changes results in reduction of
the discretionary wealth of the consumers in tourism sector. This reflects the negative
implications in anticipating the future growth of this sector. Any decline in GDP, affects majorly
the government spending and the personal consumption in the travel sector. For improving the
GDP, the prices imposed will be higher in the market which leads to inflation and because of the
inflation the purchasing power and the spending of the customers reduces (Chowdhury, 2017).
This affects the profitability and the revenue of the travel sector as people will not prefer to go
for trips.
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2.Building and Construction services
With the global warming the climate have became vulnerable and and the construction industry
faces many challenges regarding designing and constructing building and infrastructure that can
with stand stress from changing climate.
Microeconomics Impact:
Change in Supply: With changing climate supply have also changed in the construction
industry the as the supply of green roof, living walls and better energy efficient houses and
building are demanded to lessen environmental impact (Boland, 2014). Th supply have changed
in the direction of getting services where the building and residential houses are capable to cope
with the sudden changes in climate such as tornados, floods, hurricane.
Price:The prices have changed as the services provided are now have become more
particular and included use of advanced technology. This clear have shown a price hike in
providing the services of building construction as compared to the older times.
Production: The production have increased as people are now are focusing on making
their building and houses which can face the changing effect of climate (Nguyen and Wait, 2015)
The production of apartment building have increased with 30% in 2018.
Welfare: towards the welfare the constructionist service have seen a positive side as the
supply have increased in the direction of providing safe and climatic change proof houses and
building in Australia.
Macroeconomics Impact:
GDP, inflation and unemployment
In the present scenario, climate change is giving long lasting impact on the Building and
construction industry as it decreases emissions through buildings and give numerous advantages
to both society and economy. It mitigates the adverse impact and increment in global population
growth with increment and expected population of 9.7 billion people by year 2050 and it will
lead to scarce the resources. It has given major impact on investment on both positive and
negative aspect due to unforeseen circumstances (Yang and Ng, 2015). This has contributed 8%
to GDP with amount of $134.2 billion and this has not affected unemployment as it is 3rd largest
construction industry of 1.05 million in negative aspect.
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CONCLUSION
From the above report it can be concluded that climatic or environmental is inevitable
and changes on a frequent basis which affects the demand and the supply of the services of the
construction and the travel industry. It also impacts the macro factors as well such as GDP,
inflation in the economy.
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REFERENCES
Boland, L. A., 2014. Methodology for a New Microeconomics (Routledge Revivals): The Critical
Foundations. Routledge.
Nguyen, B. and Wait, A., 2015. Essentials of Microeconomics. Routledge.
Yang, X. and Ng, Y. K., 2015. Specialization and economic organization: A new classical
microeconomic framework (Vol. 215). Elsevier.
Argy, V., 2013. International macroeconomics: theory and policy. Routledge.
Cross, J. and Poon, A., 2016. Forecasting structural change and fat-tailed events in Australian
macroeconomic variables. Economic Modelling. 58. pp.34-51.
Chowdhury, M. B., 2017. Resources Booms and Macroeconomic Adjustments in Developing
Countries. Routledge.
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