Reducing carbon emissions could save hundreds of millions of lives

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ECONOMICS ASSIGNMENT
INTERNAL ASSESSMENT
Commentary details
Title of the article: New study finds reducing carbon emissions could save hundreds of
millions of lives
Source of the article: The Chronicle http://www.dukechronicle.com/article/2018/03/new-
study-finds-reducing-carbon-emissions-could-save-hundreds-of-millions-of-lives
The date of the article: 22/03/18
The word count of the commentary: 750
The date the commentary was written: 11/04/18
The section of the syllabus the commentary relates: Microeconomics

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Table of contents
Introduction................................................................................................................................3
Terminology...............................................................................................................................3
Application.................................................................................................................................3
Analysis......................................................................................................................................4
Evaluation..................................................................................................................................5
Conclusion..................................................................................................................................5
Reference....................................................................................................................................6

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Introduction
The chosen article talks about how the reduction in carbon emission in different
countries can save lives all across the world. According to the article, the lack of proper
policies of the government to deal with the carbon emission results in loss of human lives.
The aim of this paper is to present commentary based on the chosen article. The commentary
includes the application, analysis and the evaluation of the theories that link to the problem
stated in the article.
Terminology
The article uses the economic terminology of externality which is referred to as the
external economic impact of an activity which is generally not taken into account by
economic entity (Möhlmeier, Rusinowska & Tanimura, 2016). Based on the type of impact it
has on the humans and the environment, externality can be classified into two categories of
positive and negative externality. While in positive externality, the economic activity benefits
the environment and the humans unknowingly, the negative externality creates a problem for
the environment and the human, cost of which are ignored by the economic agent carrying
out the activity (Ballentine, 2018). The problem presented in the chosen article is regarding
the negative externality of production processes that give rise to carbon emissions.
The production units, apart from the private marginal cost (PMC), also need to take
into account the Social Marginal cost (SMC) that the environment and the human as a whole
incur due to the production. For example, if a production unit is dumping the waste on the
river which is used by the neighbouring village for drinking purpose, the increased
production will also increase the health hazard and the medical bills of the villagers as well.
Application
According to the theory of negative economic externality, production houses only
emphasise on the private costs and ignore the social cost of production. As the figure 1
shows, the production houses produce at the point where the private marginal cost equates
with the social marginal benefits. However, if the production houses would have considered
the social marginal cost as a whole, the overall production would have been low and the price
would have been high (Wood & Sullivan, 2015). This market equilibrium where SMC
intersects with SMB is where the market considers and take into account the cost incurred by
the environment and the humans as part of environmental degradation and the medial bills.
According to the theory, the government can intervene in this case with many policies in