It has been estimated that if climate change led to the world’s temperature rising 2.5°C compared to the temperature in 2010, then global GDP per capita would be 15% lower by 2100 - Edexcel - A-Level Economics A - Question 8 - 2021 - Paper 2

Introduction

  The trade-offs between environmental protection and macroeconomic objectives are crucial to understand in the context of climate change. While protecting the environment is essential, it often comes with repercussions for economic growth and other macroeconomic indicators.

  ### Higher Economic Growth
  One primary trade-off involves the relationship between higher economic growth and environmental degradation. As economies expand, energy consumption typically increases, often relying heavily on non-renewable resources. This reliance can lead to heightened emissions and contribute to climate change.

  ### Inflation
  Environmental protection measures, such as packaging modifications and stricter regulations, can lead to increased operational costs for firms. This may result in inflation as companies pass on costs to consumers, thus affecting consumers' purchasing power. 

  ### Income Inequality
  Measures aimed at protecting the environment may disproportionately affect lower-income households. For example, increased costs of sustainable products can be burdensome for these households, thus widening income inequality.

  ### Unemployment
  Transitioning to greener industries can also cause unemployment in traditional sectors. Workers in polluting industries may face job losses as governments implement stricter policies. However, it is important to note that new jobs may be created in renewable energy sectors over time. 

  ### Counterarguments
  Despite these trade-offs, there are arguments that suggest they may not always occur. Governments may find that increased economic growth can lead to increased investment in environmentally friendly technologies. Additionally, as renewable energy becomes more cost-effective, it can provide sustainable economic growth without the negative impacts associated with fossil fuels.

  ### Conclusion
  In conclusion, while trade-offs between environmental protection and macroeconomic objectives certainly exist, the long-term benefits of sustainable practices may outweigh short-term economic costs. Balancing these objectives requires careful consideration and strategic planning to ensure that environmental goals do not impede economic progress.