Climate change. Methods to internalize externalities

Table of Contents

• 1 Introduction
• 2 Climate Change
  • 2.1 Global warming
  • 2.2 Greenhouse gases
  • 2.3 Atmospheric carbon dioxide
  • 2.4 Current and prospective future impacts and risks
• 3 Externalities
  • 3.1 Externalities in the context of greenhouse gases
  • 3.2 Market failure
  • 3.3 Internalization of external effects
  • 3.4 Public goods
• 4 Long-term policy problem
  • 4.1 Free riders
  • 4.2 Time inconsistency
  • 4.3 Domestic politics problem
  • 4.4 Interrelation
• 5 Economic instruments of environmental policy
  • 5.1 Coase Theorem
  • 5.2 Regulatory instruments
  • 5.3 Market-based instruments
    • 5.3.1 Pigouvian tax
    • 5.3.2 Comparison of a regulatory instrument and the Pigouvian tax
    • 5.3.3 Socially optimal level of pollution and the Pigouvian tax level
    • 5.3.4 Deviation from the optimal tax level and the resulting welfare impact
    • 5.3.5 Case study-Carbon tax in Switzerland
    • 5.3.6 Tradeable property rights
    • 5.3.7 Comparison between a carbon tax and tradable property rights
• 6 Global perspective
  • 6.1 Addressing the long-term policy problem
  • 6.2 Global coverage of emissions under a single carbon price
  • 6.3 Implications related to partial implementation of carbon pricing
  • 6.4 Global collaboration to increase responsible action

Objectives and Key Themes

This thesis investigates the insufficient efforts to mitigate climate change, examining economic instruments for cost-effective solutions and addressing challenges in global climate policy implementation. It analyzes barriers to mitigation, such as intangible results and high costs, while advocating for carbon pricing as a core component of climate policy. The study explores the potential of a uniform global carbon price and the necessity of global collaboration for effective policy design.

• Causes of insufficient climate change mitigation efforts
• Economic instruments for addressing climate change externalities
• Challenges in global climate policy implementation
• The role of carbon pricing in climate policy
• The importance of global collaboration for effective climate action

Chapter Summaries

1 Introduction: This chapter introduces the thesis's central theme: the insufficient global efforts to mitigate climate change. It highlights the urgency of the situation and the necessity to find effective economic instruments to address this critical issue. The chapter sets the stage for the subsequent analysis by outlining the main research questions and the structure of the thesis. It briefly touches upon the core argument that a global, coordinated approach involving carbon pricing mechanisms is crucial for success.

2 Climate Change: This chapter presents the scientific evidence of climate change, focusing on global warming, greenhouse gas emissions, and the escalating risks associated with inaction. It provides a crucial background by explaining the processes driving climate change and detailing its expected consequences. The chapter serves as a foundation for understanding the economic implications discussed in later chapters, highlighting the urgency and scale of the problem that necessitates policy intervention.

3 Externalities: This chapter delves into the economic concept of externalities, specifically focusing on greenhouse gas emissions as a negative externality. It explains the concept of market failure in the context of climate change, where the market mechanism alone fails to reflect the true cost of carbon emissions. This lays the groundwork for the following chapters which propose solutions to internalize these externalities and correct market failures. The chapter emphasizes the societal costs associated with unchecked climate change and the need for intervention.

4 Long-term policy problem: This chapter identifies several key challenges in addressing climate change through long-term policy. It discusses the issues of free-riding, time inconsistency (the tendency to delay costly actions), and the difficulties of achieving effective domestic and international political cooperation. These challenges, often intertwined, hinder the effective implementation of climate policies. The chapter underlines the complexity of the political and economic obstacles which prevent the adoption of effective solutions.

5 Economic instruments of environmental policy: This chapter explores various economic instruments designed to address environmental problems, focusing on their applicability to climate change mitigation. It contrasts regulatory instruments with market-based instruments like the Pigouvian tax and tradeable property rights. This section provides a detailed cost-benefit analysis of various economic instruments, including case studies to illustrate the practical application and effectiveness of these instruments in achieving climate goals. The chapter thoroughly examines the potential of market-based solutions to effectively internalize the externality of greenhouse gas emissions.

6 Global perspective: This chapter analyzes the challenges and opportunities of implementing climate policies on a global scale. It specifically examines the implications of a uniform global carbon price, exploring both its potential benefits and the difficulties of achieving global consensus and coordinated action. The chapter highlights the international dimensions of climate change, emphasizing the need for multilateral agreements and international cooperation to create a global framework for effective emission reduction.

Keywords

Climate change, externalities, greenhouse gases, carbon pricing, Pigouvian tax, tradeable property rights, market failure, global cooperation, climate policy, mitigation, economic instruments.

Frequently Asked Questions: A Comprehensive Language Preview

What is the main topic of this thesis?

This thesis investigates the insufficient efforts to mitigate climate change, focusing on the economic instruments needed for cost-effective solutions and addressing the challenges in global climate policy implementation. It analyzes barriers to mitigation, such as intangible results and high costs, while advocating for carbon pricing as a central element of effective climate policy and the need for global collaboration.

What are the key themes explored in the thesis?

Key themes include the causes of insufficient climate change mitigation, economic instruments for addressing climate change externalities, challenges in global climate policy implementation, the role of carbon pricing, and the importance of global collaboration for effective climate action.

What specific economic instruments are discussed?

The thesis examines various economic instruments, including regulatory instruments and market-based instruments such as the Pigouvian tax and tradeable property rights. A detailed comparison of these instruments is provided, along with case studies illustrating their practical application.

What is the significance of carbon pricing in this thesis?

The thesis strongly advocates for carbon pricing as a core component of effective climate policy. It explores the potential of a uniform global carbon price and the challenges associated with its implementation, including the need for global cooperation.

What are the major challenges in implementing global climate policies?

The thesis highlights several significant challenges, including free-riding, time inconsistency, difficulties in achieving effective domestic and international political cooperation, and the complexities of addressing the long-term nature of the problem. The implications of partial implementation of carbon pricing are also analyzed.

What is the structure of the thesis?

The thesis is structured into six chapters: An introduction setting the stage; a chapter on the science of climate change; a chapter on externalities and market failures; a chapter detailing the long-term policy challenges; a chapter exploring various economic instruments; and finally, a chapter offering a global perspective on the problem and solutions.

What are the main conclusions of the thesis?

The thesis concludes that effective climate change mitigation requires a global, coordinated approach, with carbon pricing mechanisms playing a crucial role. It emphasizes the necessity of overcoming political and economic obstacles to achieve effective international cooperation for the implementation of successful climate policies.

What are the keywords associated with this thesis?

Keywords include: Climate change, externalities, greenhouse gases, carbon pricing, Pigouvian tax, tradeable property rights, market failure, global cooperation, climate policy, mitigation, and economic instruments.

How is climate change presented in the thesis?

The thesis presents the scientific evidence of climate change, focusing on global warming, greenhouse gas emissions, and the escalating risks associated with inaction. It provides a foundation for understanding the economic implications and the urgency for policy intervention.

Where can I find a detailed breakdown of the chapters?

Chapter summaries are provided, outlining the main points and arguments of each chapter. These summaries offer a concise overview of the thesis's content and logical flow.