The Economics of Climate Change
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The economics of global warming can be thought of as divided between the projected impact monetarily
to the world'seconomies, and the economic controls enacted by governing bodies to prod change. Monetarily,
numerous studies had been conducted to analyze the cost to economies of scenarios ranging from the affects
of living in a changed climate to the affects of forcing companies, organizations and individuals to act
more carbon neutral. Unfortunately, the results are so wide ranging that there are numbers to support both
the advocates and naysayers to adopting policy that chages current behavior. Reports have gone from stating
trillions of dollars of damage to economies to stating trillions of dollars of expansion to ecnomies.
The human activity causing global warming is within our control. Humans do have the capability
to act now and begin to make the right choices to mitigate global warming. But, sadly, the choices
aren't available for people to make while sustaining the comfort level of our current lifestyle.
Government
Economically, governments around the world have seen the need to step in and drive the change that will
be necessary in the global economy. This entails enacting carbon trading schemes
( Kyoto Protocol),
carbon caps, taxes and incentives to lower CO 2 production.
Carbon Trading:
Countries that emit less than allowed could sell their unused emissions
to others that are over their limit. This protocol would establish an
emissions “stock market,” or “carbon market,” where emissions could be
bought and sold. In addition, countries could get credits for reducing
greenhouse gases by planting or expanding forests or other
environmentally friendly activities.
Carbon Caps:
The Kyoto Protocol sets limits on total emissions by the world’s leading economies.
It is expected that some countries will do better than expected, while some will emit more that allowed.
The same kind of protocol could be extended to regions, cities, or even households.
Taxes:
Taxes imposed, or tax breaks given by the federal, state or local governments further
act to drive behavior of businesses, organizations and individuals to act in certain ways and buy
certain products.
Incentives:
Tax incentives that reward businesses and consumers for reducing their
carbon footprints will further reduce greenhouse gases.
Commerce:
The market systems in place around the world work to create demand for products and services that
reverse global warming, and reward those companies that innovate to create those products. The
market system is driven by money rather than science however: the companies, products and services
that have the highest earning potential win out over the best scientific potential.
You!
Even though much of this is put in place at the macroeconomic level and pointed at business, the
underlying target of it all is You, the consumer. You and I are the cause of climate change or
climate change correction, economically. Choosing to buy a green product or service has the economic
affect of showing that it's in demand, and the makers of it and similar products make more. When
more are made, they become better and cheaper. This continues in a productive or destructive cycle.
The Science of Global Warming - why is global warming a problem?
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