Question

1. “With a global economy, the only way to achieve cost-effective control of greenhouse gases is to assure that every country imposes the same universal set of emissions standards.” Discuss.

Answer 1

The global economy is an economy where all humans are having different kinds of transactions, which helped them to be financially sound. There are many factors that have affected the global economy one such factor is the effect of greenhouse gases which is caused due to pollutants to the world economy like overuse of electricity, transportation, forestry, energy, etc which is the outcome of financial transactions.

In order to ensure the universal standard to achieve cost-effective control of greenhouse gases the government must initiate carbon tax. When this is implemented we can reduce emission to the point that the marginal benefit of the reduction equals its marginal cost. In public economics, we have a Pigouvian tax if implemented the marginal benefit of the emission reduction or equivalently the monetized damage from an emitting and an additional ton of carbon dioxide. The carbon externalities will then be internalized and the market will find out cost-effective ways to reduce emission up to the amount of the carbon tax.

In some countries, in order to control greenhouse gases, they must take certain steps by replacing coal-fired electricity generation with wind or weathering at home. In this method, spillovers are ignored as the cost is static due to this marginal abatement cost (MAC.) curve if considered it can be analyzed as it plots out the marginal cost of achieving a cumulative level of emissions abatement in order from the honest to higher cost technology.

When greenhouse gas emission is controlled automatically it induces sustainable development which brings universal standard among the nation to save and to protect the mother earth so that the humans and its environment can live smoothly free from pollutants.