How Governments Can Help Aid The Climate Issue

1195 Words Sep 17th, 2015 5 Pages
1.
When issues arise, governments are the ones that intervene into the market to correct market failures; these include issues such as climate change. In order to correct these issues government use methods such as inequality, externalities and public goods. This restores efficiency as well as increasing the economic well being of society. The environment is accessible by every individual as it is non-excludable. Thus, meaning that no one can be prohibited from using it and one person’s use diminishes another person’s use of it. Since it is a common resource accessible to everyone, it can easily be overused, this is when a government should intervene in order to restore the balance. There are many ways in which governments can help aid the climate issue, one being by controlling prices in the markets (directly) or by taxing and subsidising demand and supply (indirectly). But, obviously climate change could not be aided through something as simple as changing the price, so that means that the intervention would be seen as indirect because there is no market for climate change. It will be difficult for the government to measure social costs (externality) of climate change. These exist when the production or consumption of a good has a positive or negative side effect on third parties that are not accounted for in the price of the good. Manufacturing companies emit carbon pollution during the production process that increases the contamination in the environment. In order to…
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