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What makes climate change an economic problem? And if it is, how should policy deal
with it?
Your answer should include reference to at least three of the following aspects of the
problem:
a) Climate change as an externality
b) A carbon tax vs. cap and trade
c) Cost-benefit analysis
d) Assessing costs to future generations
e) Environmental dynamics
Step by step
Solved in 2 steps
- The climate policy toolkit has, to-date, mostly focused on demand side policies (i.e. policies that affect the pollution demand curve), some of which are ‘command-andcontrol’ and others are market based (e.g. cap-and-trade schemes, carbon taxes). (a) Explain what is meant by command-and-control in terms of a demand side climate change policy. What are the pros and cons of this as a policy option? (b) Using a diagram, explain how a carbon tax could help reduce pollution.Can economics help us to understand, and deal with, the prospect of climate change dueto human activities?Your answer should include reference to at least three of the following aspects of theproblem:a) A carbon tax vs cap and tradeb) The UK’s legal commitment to reduce net carbon emissions to zero by 2050c) Assessing costs to future generationsd) Bargaining over climate changee) Environmental dynamicsCritically analyse the macroeconomic and financial effects of climate change. How do these effectsdiffer between the Global South and the Global North?
- The climate policy toolkit has, to-date, mostly focused on demand side policies (i.e. policies that affect the pollution demand curve), some of which are ‘command-and control’ and others are market based (e.g. cap-and-trade schemes, carbon taxes). (a) Using a diagram or diagrams, explain how a cap-and-trade scheme could result in pollution reduction. (b) What is the Emissions Reduction Fund and what are its pros and cons? 1(c) Of the following four policy options, which one do you favour as a demandside policy and why? i. command-and-control in terms of a demand side climatechange ii. carbon tax iii. Emissions Reduction Fund iv. cap-and-trade schemeWhat are the two main approaches to tackle the problem of global warming and climate change? Next, compare the two approaches along the following dimension: Based on the current state of scientific and economic knowledge, which of the two types of policy is most likely to be cost-effective? Does it mean it will be used? Explain.What Enviornment and climate change program has been initiated and implemented by the govenment of Pakistan for the fiscal year 2021-22? Explain.
- why is the climate change problem so hard to solve? Applicable concepts : emissions trading and effluent taxesEconomists describe human-induced climate change as an ‘externality’What does this mean and how is it linked to climate change?There is increasing scientific evidence that climate change caused by human actions has substantially impacted surface temperatures on Earth. However, what is unclear is the tools available to managers and policymakers to reduce carbon emissions. Greenhouse gas emissions come from a large number of sources such as power plants, and factories to automobiles all around the world. Therefore, the number of pollution sources that need to be controlled is enormous. Additionally, countries often balk at the enormous price of curtailing their emissions. To address some of these challenges, the European Union adopted a cap-and-trade system to reduce their emissions. As an economic advisor and consultant to the European Union, your opinion has been sought on the cap-and-trade system and whether it is beneficial in reducing carbon emissions. Using the tools of managerial economics, analyse the cap-and trade system and comment on the ability of this policy to reduce carbon emissions. Does a…
- Consider the global market for carbon dioxide. how would you Explain the economic theories of intertemporal choice, choice under uncertainty, and externalities help in understanding this market and its welfare consequences, as well as the challenges one encounters when trying to apply such theories to this context?Imagine you are working as a climate advisor to the federal government and they want to craft a bill to drastically reduce methane emissions in America. Which of the following policies would you recommend to them as the most effective in reducing methane? a. federal and state funding being directed to the western states for large scale forest management and fire prevention b. incentive programs to reduce meat production and consumption, while additionally subsidizing alternative diet options c. a nationwide waste management program focused on composting organic material to divert waste from landfills d. incentivizing solar panels to allow for affordable renewable energy that is competitive with market pricing for energy]To evaluate potential policy options that address emissions and climate change, economists often recommend a thorough cost-benefit analysis, in which the avoided environmental and human health damages are weighed against the["marginal abatement costs", "marginal abatement benefits"] . Most estimates by environmental economists suggest that the benefits of emission reduction are somewhere between 5-20% of world GDP, while the costs are between 1-4%. Using a cost-benefit analysis, this would imply that these policies ["should", "should not"] be implemented. The resulting policies can take the form of ["preventive", "adaptive"] strategies, those that reduce damages resulting from climate change, or ["preventive", "adaptive"] strategies that reduce emissions.