Climate Change threatens to be the greatest and widest ranging market failure ever. do you support or reject !

Question

Sir Nicholas Stern, Climate Change Economist, has stated that Climate Change threatens to be the greatest and widest ranging market failure ever. http://www.abc.net.au/7.30/content/2007/s1884160.htm

I need a discussion for about max 2000 words that supports or rejects this statement using the economic concepts defined and covered in economics to explain your position.

Answer 1

I think the market will be more effected by the availability of fossil fuels more than a change in climate.  I think Nicholas Stern doesn't have many followers in the private sector.

Answer 2

No--its not a "market failure" in the technical meaning of the term.  A market failure is a situation in which a free market fails to respond to a need or demand.  It's very clear that the marketis responding--with advanced technologies for using wind and solar paower, and new products ranging from efficient light bulbs to electric cars.

To the extent that the market is free, that is.  But that is true to only a minimal degree.  Which mostly, it isn't.  Instead, US eergy policy is dictated by a few large corporations.  A free market depends on the unimpeded flow of valid information--and that is still not the case. The same special interests, with the active help of the current administration, is suppressing and censoring scientific information.  Public policy remains geared toward subsidies for corporations like Exxon and preferential treatment of tose companies.

And the situation is as bad or worse elsewhere, in many cases. Not even the most knee-jerk apologist for the status quo can pretend China's enrgy policy or industry is a "free market" system.

Again, there is no "market failure." What there is is a system in which there is no free market to start with, but rather a network of governmental and private special interests who are doing everything they can to block access to the market by potential competing usinesses and technologies.

Answer 3

Your link was broken for me, but I reject such ideas. Global Warming is not going to be 100% bad. It will be 50% bad and 50% good. We are not so lucky as to live in the exactly perfect climate that Earth could ever have and I would need WAY more proof than I have seen to convince me that global warming will be 100% or even 80% bad.

What does threaten the economy is an energy shortage, either by running out of oil before alternatives are developed, or by voluntarily giving up the use of it before alternatives are found. So I don not support a carbon tax but I do support all kinds of alternative energy projects. And maybe changing the oil depletion allowance to an oil depletion tax.

Answer 4

Not an economist, simply one of the top experts on the role of various atmospheric components on climate forcing:

http://www.ecd.bnl.gov/news/NationalPost...

Stephen Schwartz knows as much about the effects of aerosols on climate change as anyone in the world, and he's worried. He believes climate change is so massive an economic issue that we face costs "in the trillions if not quadrillions of dollars." He thinks a Herculean effort and great sacrifice is required to get the world down to zero net increase in carbon dioxide concentrations, an effort he compares to that which the Allies undertook in their all-out war against n**i Germany and Japan.

"Recall World War II, where everyone was making a sacrifice: gas rationing, tire rationing, no new car production, food rationing," he explains. "I don't think the people of the world are ready or prepared to make such a level of personal sacrifice. Perhaps when the consequences of climate change become more apparent that will change. But by that time, there will be irreversible changes in climate."

http://www.ecd.bnl.gov/news/NorthShoreSu...

"I'm very concerned about the world my grandchildren will live in," said Mr. Schwartz, who is currently studying climate change. "There could be an increase of four to eight degrees in the next century, and that's huge. The last time there was a five-degree Celsius decrease was the last ice age. An increase of eight degrees Fahrenheit would bring change unprecedented in the last half-million years."

Scientists aren't sure exactly what such a change in temperature could bring, but one of the "big possible consequences" is an increase in sea level, Mr. Schwartz said.

Answer 5

NO...............

Answer 6

The position starts with no assumption as to whether the economy has started or largely completed a conversion to alternate energy, which is fair considering that alternate energy is more related to one strategy for avoiding global warming.

If prediction of widespread drought and flooding, ever increasing wind storms, etc are to be taken as givens, we should expect enormous outlays to repair and deal with these catastrophes. Existing businesses may not be able to get materials or distribute product not merely for want of it, but because it will be diverted to rebuilding/ repair.

If anything, we should expect wide scale shortages of many things and an urgent attempt to correct that situation. This should drive the economy into full blown inflation. At the same time we should expect to see the valuation of many assets to be destroyed, bankrupting those who owned them and those who loaned the money to purchase them.  

How people react could very well determine whether this would cause general collapse. It certainly would have the potential. A key part of the coping mechanism would be salvaging the usable or recyclable and planning for its use.

Answer 7

Well that's the point and also the problem, we're still looking at this as some sort of market entity, it isn't, it's a survival entity, and until we see it as such we'll never appreciate the gravity of it.