Alternative Approaches to Slowing Global Warming - Essay Example

Environmental economics Introduction In the article “To Tax or Not to Tax: Alternative Approaches to Slowing Global Warming”, the author William D. Nordhaus has enumerated on the various aspects on Global warming issues and how the imposition of taxes or a cost would enable the countries to contribute to the solution of global warming. The article has been written down from the political and economic point of views and how a control by the government on the public goods would help to combat the problems. The different control mechanisms which are either price controls or quantity controls have undergone a thorough analysis in the article. Along with that the various prospects and the setbacks that the government face relating to these controls have also been discussed by the author. This report makes a humble attempt to analyze the facets of the study made by the author and investigates the pros and cons of the study. Finally a recommendation for the areas where further study could have been done has also been provided. Discussion In the introductory part of the article the scientific analysis of the problems of global warming has been provided. This is a constructive approach which would help the reader understand why there is a necessity for the control of pollution. An outline of the source of the problems has been discussed. The issue of climatic changes has been explained with the help of suitable examples. The reader can understand that the emission of various industrial gases which include carbon dioxide, methane, nitrous oxide, ozone and other gases are the reasons why the atmosphere around the earth is getting polluted and how it is linked to the changes in the climate. According to the author, although the scientists had made the world aware about the negative consequences of global warming a long time back, the countries have been instrumental in taking formal actions only at a later stage. In this context the author has put forward the example of United States. The United Nations Framework Convention on Climate Change is the body that started its functioning with the Kyoto Protocol in 2005. The framework was adopted by the participating industrialized countries where the emissions take place the most. The European Emissions Trading Scheme was an attempt made by the countries of the European Union to tackle the problems of Carbon dioxide emissions in the countries with the implementation of the economic principles (European Environment Agency 11). However, according to the author the Kyoto Protocol had major problems because there was very little scope for inclusion of the other countries. The United States also did not participate in the treaty which acted as a major setback for the success of the mission. The treaty also suffered a failure because the growth in the industrialization took place in the countries that did not come under the purview of the treaty. This is a valid argument put forward by the author because any schemes that are being adopted by the countries have to be remodeled with time. Unless all the countries come forward and participate, a global issue cannot be countered only by a few nations. Therefore Nordhaus posited that the nations did not do enough in the initial stage to combat the pollution levels of their respective countries. Therefore the article does a detailed analysis of the Kyoto Protocol and also tries to look for an alternative solution in case of non viability of the former. The author has presented the first section of the article with global public goods, an example of which is the phenomenon of global warming. The author has describes these goods as those which affect the entire world and are not specific to any country. The global public goods are becoming more prominent with time because of the extensive of use of technology. This representation of global warming is somewhat not appropriate because it is a result of production or consumption of a good and therefore should be considered as a negative externality rather than a public good (Mas-Colell 351). For example the emission of CO2 due to the production in a factory at a certain locality would lead to negative externality to the residents of the neighborhood. The pollution should be categorized as a negative production externality rather than a public good. The author has mentioned the other forms of global public good as well. The nations have been able to do very little to tackle these problems and to provide an effective solution. Thus there is a need for integration of the entire system from the grass root level to the level of international governance as Nordhaus holds (Nordhaus 31). This is the correct stand by the author. Unless the awareness and measures are taken to the grass root level a global problem cannot be addressed by mere signing of treaties at the higher levels. The author has also categorized global public goods into focal and economic goods. However, this classification is not exhaustive because as per the definitions of the two types there may be public goods of other categories which may be left out by the author. These two goods are not mutually exclusive. Nordhaus has considered Global warming as an economic public good. However, it is also a focal public good as per the definition of the author because the general public would always aspire for a zero global warming though it is impossible to attain. The author in the next section has described the various approaches that can be taken to deal with these problems most of which are voluntary actions to be taken by the nations and some depend on the market principles. Most of these approaches are practicable as far as global warming is concerned. Nordhaus has mentioned the importance of government in the entire process of reduction in the pollution levels. This is because according to him the governments of the respective countries can only implement policies that would bring the huge number of companies under strict regulations. The author in the later part of the text has touched upon the various issues that crop up in the course of the climatic change administration. The importance of the reduction in the emissions has been acknowledged by the author at various stages in the article. Not only that the importance of the time and place of the emissions and the way to determine them has been done by the author in a very systematic and scientific manner. The analysis has been supported by relevant diagrams and graphs which make the study and the arguments much stronger. The author has made an outline of the optimal emissions reduction processes and how the distribution has been done in the different countries that are participating in the program. There are various costs that the countries would have to bear. These costs have to be distributed as per the capacity of the nations depending on their status whether they are high income or low income. The marginal cost of emissions should be shared by the countries in a fair manner. A chart has been provided for the abatement costs of the Kyoto Protocol which gives a practical insight of the various schemes and helps the reader to make a cost benefit analysis. However, the benefits that the countries would derive have not been explicitly explained as that of the costs. Nordhaus criticizes the Kyoto Protocol on the ground that the major polluting nations US and China have been excluded. However, its importance cannot be denied being the stepping stone for the initiative taken by the nations to limit the amount of emissions. The article shows the ways in which the countries can be encouraged to participate in the process of reduction of emissions. The influence of international politics has been pointed out by Nordhaus and he remarks that the countries do not voluntarily contribute to the program unless they have real benefit out of it. All the nations want to pay as little as they can as abatement cost. The approaches which deal mainly with the mechanisms of pricing have been reviewed by the author. However, the detailed analysis has been done only for a single method and the other approaches have been ignored. Finally the author has undertaken a structured comparison of the quantity and the price approaches. The necessity for setting a baseline for the countries has been enumerated. These baselines according to the author would be of different forms for price and quantity approaches. Nordhaus has acknowledged the possibility of uncertainty and risky situations in form of volatility in the prices (Nordhaus 1283). However, there is no explanation or solutions for these situations of uncertainty. The other ethical and administrative issues have also been addressed by the author. Reflection The article written by the author is a comprehensive study and analysis of the various issues relating to global warming from an economic point of view. I feel that the author has done justice to the topic with the details at every point of his argument. The text has been supported by necessary diagrams and graphs which has helped to go get a more clear understanding of the problems. However, in some areas the author could have explained more. The use of mathematical calculations or economic analysis using cost curves and pricing is lacking. The incorporation of the mathematical calculations would make the analysis more all-inclusive. The representation of global warming as a public good rather than a form of negative externality is also not acceptable. The aspects of externality have been completely ignored. The basic economic principles of Pigouvian taxes could have made the arguments of the author stronger. The author in the conclusion has criticized the Kyoto Protocol as a mission with lack of any long term goals. This is not true. The mission was to keep the level of CO2 emissions within the limits. This is a more practicable approach as no country can reduce the level of economic production and economic growth only for the control of pollution. However, a balanced methodology has to be adopted and newer technologies should be invented that would be more environment friendly and would lead to sustainable development. Conclusion The report has made a critical analysis of the article written by Nordhaus. The quantitative and price analysis has been done to analyze the prospective areas where the countries can implement policies so that it leads to a sustainable climatic balance. It is essential for the countries to maintain a proper regulation so that the future generation does not suffer from any adversity. The author has expects that the wind of awareness would be able to bring about changes in the attitudes of the nations of the globe and various negotiations would be taking place on the world forum between countries addressing the problems of global warming. Works cited Andreu Mas-Colell, Michael Dennis Whinston, Jerry R. Green. Microeconomic Theory. New York: Oxford University Press. 1995. Print. European Environment Agency (EEA). Environmental taxes — Implementation and environmental effectiveness. Copenhagen: EEA. 1996. Print. Nordhaus, William D. To Tax or Not to Tax: Alternative Approaches to Slowing Global Warming: Review of Environmental Economics and Policy. Vol 1. (1). 2007. Print. Nordhaus,William D. Global warming economics. Science. Vol. 2 (1). 2001. Print. Read More