Geoscience Reference
In-Depth Information
3
THE ECONOMIC ORIGINS OF
CLIMATE CHANGE
Most people think that global warming is a question for the natural sci-
ences, that it primarily involves heat waves, melting ice sheets, droughts,
and storms. True, scientifi c controversies have been central to public
debates about global warming. However, in reality the ultimate source—
and the solutions—lies in the realm of the social sciences.
WHY IS CLIMATE CHANGE AN ECONOMIC PROBLEM?
Begin by stepping back and asking a basic question. Why is global
warming such a special problem? Why is it a global problem and not a
national problem or a household problem? Why is it such a persistent
problem?
The economics of climate change is straightforward. Virtually every-
thing we do involves, directly or indirectly, the combustion of fossil
fuels, which results in emissions of carbon dioxide (CO
2
) into the atmo-
sphere. The CO
2
accumulates over many decades, changes the earth's
climate, and leads to many potentially harmful impacts.
The problem is that those who produce the emissions do not pay for
that privilege, and those who are harmed are not compensated. When
you buy a head of lettuce, you pay for the costs of producing it, and the
farmers and retailers are compensated for their efforts.
But when producing the lettuce requires the combustion of fossil
fuel—to pump the water that irrigated the lettuce fi eld or to fuel the
truck that delivered the lettuce—one important cost is not covered: the
damage caused by the CO
2
that is emitted. Economists call such costs
