- Externalities: Businesses are not made to fully bear the costs of thier pollution, therefore they will overproduce it. This is actually a literal textbook example.
- Tipping points: Global climate appears to have “tipping points” – that is, where no change appears to occur when something gradually changes until – BAM! – it changes dramatically. Any appeal to the market to come up with solutions ignores this; by the time there’s feedback to the market to change its ways, the change is already too far gone.
Externalities are largely agreed upon as one of the best times for governments to become involved with the economy. This would argue that signing onto Kyoto and strengthening the EPA would be a necessary thing to do.
The only other option is to willfully ignore global climate change – and that’s what this administration appears determined to do.
Tags: global climate change, economics, externalities, global warming