Carbon Emission Reduction Policies

This assignment examines the effectiveness of various policies designed to reduce carbon emissions. It compares traditional government regulations with market-based approaches, highlighting the potential costs and benefits of each method. The paper delves into how these policies influence production levels, considering the impact on both national and international markets. Additionally, it explores the economic implications of different emission reduction strategies.

PUBLIC POLICIES ON ENVIRONMENTAL EXTERNALITIES
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INTRODUCTION:
Modern world is combined projection of enormous social, political and economic
activities. The manifestation of these activities’ impact on environment is evident in various
aspects and one of the important has been climatic changes. Environmental deterioration
stemming from human actions has become common ailment every country of the world faces.
The World bank report on climate change and development predicts the world temperature to
rise by 5 degree Celsius in coming 100 years in contrast to the pre-industrial phase (Desmet and
Rossi-Hansberg 2015).
The report presents a discussion on the simultaneous impact environment and economic
activities exert on each other. Various economic activities like industrial production emits green
house gases that adds to the worsening of global warming. The global warming in return
contracts the limit of economic expansion based on the policies taken publicly to keep the earth
temperature in control. The report also highlights some public policies to regulate the
externalities on environment and how efficient they are.
ECONOMIC IMPACT OF GLOBAL WARMING:
The impact of global warming is huge in terms of economic and further social terms.
Increase in temperature enhances the sea level and various climatic changes that impact the
agriculture greatly, Agriculture is the source to feed people and the biggest impact of global
warming falls on it in terms of changed rain consistency, extreme weather condition including
more heat and severe snowfall.

The source of global warming is emission of greenhouses gases like carbon dioxide,
methane emitted from industrial production of the developed as well as developing nations. More
production implies more emission of these would create pressure on the industries to either
reduce the production level or employ more energy efficient technologies. International trade of
today’s world are subject to share and exchange of range of goods and services that exploits the
natural resources abundantly and cause environmental degradation. From consumer goods
produced agriculturally and industrially to many services have caused impacts on nature. Thus
trade has important contribution in the emission of green house gases leading to worldwide
increase in temperature (Strand 2013). But on the other hand trade can be source of facilities in
terms of newer and improved technologies adopted. The research and development being
conducted worldwide in order to not only reduce the harmful gas emissions but also come up
with production an management technique that leads to optimum use of resources saving up
energy. Moreover, ecological sustainability is also important factor to be taken cared by
switching to energy efficient mode of production than energy extensive production in various
sectors.
One of the crucial impact that global warming has on human race is problem of
migration. The sea level rise cause difficulties for the economic activities based on shoreline.
The increasing acidic water body, extreme weather condition and consequent effects on lifestyle
induce people to move from one place to another (Wheeler and Von Braun 2013). This leads to
huge crisis as new habitats should be made and the population distribution becomes biased
leading to increasing population pressure on land. Excessive land pressure does affect the
environment.

More the production ignores the detrimental impact it has on the nature, more is the
negative outcome exerted on the nature through economic activities like farming, industry
production, fishing etc. this would require control or check on the production if the impacts are
not neutralized through adoption of efficient technology. This poses challenge to the
employment opportunities throughout the world. The global warming changes the geographical
advantages a country has and the employment opportunities might become impacted through
that. For example for extreme weather condition, the farming of arctic and temperate zone gets
affected that further reduces agricultural employment of the region.
PUBLIC POLICIES TO CONTROL ENVIRONMENTAL DEGRADATION
The biggest focus of the policy maker to deal with the chronic issue of global warming is
to check the emission of hazardous gases mostly carbon dioxide a common emission that
increases temperature remarkably by trapping the heat and radiation. The carbon emission is
problem at both individual as well as social level hence government implementation of policies
is required to keep the level of emission in check. Some of the policies can be:
Imposition of tax on carbon emission has been one of the popular control policies to
check the global warming proceeding. The tax can be conceived as pollution tax and levied
based on the carbon content that fuels have. The developed countries that is more prone to make
carbon emission due to higher production volume tries to resist the tax level as it causes loss of
production. The social cost of carbon emission that is the marginal cost per tonne of emitted
carbon has on the society both in economic and non economic way are massive which led to the
global countries sign various environmental treaties in order to maintain a controlled level of
carbon emission (Urry 2015) .

Tax exemption of sustainable companies can be other good public policy to encourage
green production and reduce level of carbon emissions and resulting environmental degradation.
More investment should be made in research and development of green technology making more
use of renewable resources. Subsidy should be provided in researching and adopting new
technologies that helps in bringing innovation (Grubb 2012).
Deforestation should be made illegal in order to maintain the ecological balance as it is
one of the sources of green house gas emissions. Elimination of subsidy on all sorts of fuel can
be another good way to discourage the use of exhaustible resources that are more polluting and
harmful.
Another important policy in this context is cap and trade or emission trading. Here
economic incentives are provided to achieve targeted reduction in emission of pollutants. The
government sells permit empowering the polluters to pollute up to a level fixed in the permit. To
increase the level of emission, the polluting firm or business unit need to buy more permits.
REGULATION VS MARKET-BASED POLICIES
The impact of the harmful gas released by human through various activities has raised
concerns of the increasing global climatic changes that compelled governments of different
countries to implement national program to check it. The Kyoto Protocol in 1997 made the
countries come together in maintaining reduced level of green house gas emissions. Analaysis
made by OECD suggests reduction of emission is possible at lower cost based on adoption of
proper policies. The use of strong market based policies to set global price for green house gas
has been popular. Regulation refers to various socially determined and legally implemented
policies that evokes awareness on global changes and involve the entities to abide by some

agreed level of emission. Kyoto protocol is one of the regulatory approach towards checking
emission. Market based policy instruments targets to modify individual as well as firm’s
behavior channeled through various financial gains and losses they face. These kind of policies
makes adjustment of the relative prices and creates market that did not exist prior. Market based
policies can range from imposition of taxes , elimination of subsidy to making use of energy
trading system. Moreover market based policies create a system where the associated cost with
pollution are incorporated into the decision making of the entity that pollutes. These costs are
generally not refelceted in the prices prevailing in the market.
Popular market based mechanism to control emissions are imposition of carbon tax and
cap and trade or permit trading. These market-based policies not only reduce emission but also
effectively handle the cost that comes with reducing the carbon emission level. In case of
tradable permit, the specific reduction is achieved though no cap in costs is applicable. Carbon
taxes put cap on marginal cost of controlling emission at tax level specified in the tax but there is
uncertainty in reducing the carbon emission (Ploeg and Withagen 2014). Finally it can be said
where regulation like subsidy on solar power, taxation o pollutants or legal regulations of
emitters commands reduction of emission to certain level even incurring much social cost by
doing that, market based policies focuses more on the managing the costs through providing
various incentives or disincentives to regarding emission making it more effective.
CONCLUSION:
The biggest challenge posed to the modern globe is the detrimental impact on
environment that all of the combined economic activities have . To check the progression toward
devastation and maintain sustainable development adoption of proper policies nationally are

important. The economic impacts of continued global warming are huge as the entire economic
functioning can disrupt through geographical dislocation, loss of employment or trade,
production being forced to stop and so on. The public policies in form of regulation coming from
government have been popular mode to reduce carbon and pollutant emission. There regulations
imposed higher cost of emission in form of reduced production level which is impossible to meet
at the point of growing demand of the economy both form national and international market. The
market-based policies have been able to cost of reduction efficiently by allowing the farms to
reduce emission without loosing volume of production.

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