Another interesting aspect of analysis is the inclusion of Harvard economist Martin Weitzman’s pronouncement that the conventional economic analysis of climate change is “arbitrarily inaccurate”. This, he exemplifies by stating that such economic analysis doesn’t take into consideration extreme case scenarios, therefore, suggesting that when you don’t weigh a variety of different options, it is often hard to make an accurate assessment. Moreover, what economists also fail to understand is how fast the developing world is growing both economically and politically. The striving to attain economic and political prowess depends primarily on a nation’s ability to harness her industries, and then participate in a global economic paradigm with the exchange of commodities they create and need from others. This is only possible if countries have industries that are capable of producing commodities. For this enormous consumption of fossil fuel is required. What is evidently ironic is the fact that market-based economies have been primarily responsible for enormous consumption of fossil fuel. Therefore, market-based approaches to climate change mitigation are not consistent with the overall aim of climate change mitigation.
The question that needs to be raised is: As global climate change is a global threat, should private firms make money to solve public problems? If profit margins were not lucrative, would private companies be interested in investigating such issues of profound consequences.
However, what is also equally true is that there seems to be a growing consensus of the threats we face globally from greenhouse gases. Unfortunately, global politics is often dictated by the politics of economics. Despite being a signatory to the Kyoto Protocol, the United States, for example, is the second-largest emission producer of the world today. The country that produces the most amount of emission is China followed by India. All in all, this simple statistical evidence goes on to suggest that governments of these countries are more concerned in generating profit rather than solving global problems we face collectively. There is a widespread sentiment across the globe that climate change is an issue that “we will deal with later but for now let’s work on maximizing our profits.” This is also because scientific experiments elude us of the fact that we may witness the consequences of climate change only in 50 years.
Therefore, people tend to be complacent. In a neoliberal economic paradigm, the concept of alleviating global warming is primarily a farce. For example, even in the United States, offshore drilling near the shoreline of California has now become a real option for the US government to excavate fossil fuel. Another example to this effect is the decision of the German government to develop gas pipelines from Russia to supplement Germany’s energy needs. In the truest sense, governments have actually been supporting private firms resolutely to increase profit margins. For example, Reliance India sought the intervention of the Prime Minister’s Office in India to establish fuel pumps in South Africa.
In an era, where free market economies are prevailing despite the global economic slowdown, it would be foolhardy to ignore the role private companies have begun to play in researching the consequences of global climate change.
Game theory has also been used by various governments to great effect to squander the chances of alleviating global warming. For instance, game theory is developed on the basis of preempting other’s strike or suspected advancement. Although the game theory was more widely used during the Cold War, it is still being used today in other forms. For example, China has started developing major macro hydropower stations in the Tibetan plateau. This development is a major concern to India because the Brahmaputra River is critical to India’s power supply in the east. The lower level flow of water in the Brahmaputra due to the development of hydro power stations in China has had adverse impacts on the Brahmaputra water levels on the Indian side. Another example is that of Pakistan, India and the US. Recently, the governments of India and the US signed a memorandum in the hope of establishing a nuclear plant to help India meet its energy needs. However, as soon as India and the US signed the nuclear agreement, China offered Pakistan the same package to neutralize India and US.
Last, the theory of mercantilism is still very relevant towards the degradation of climate change. Nations have and continue to focus on exporting their products to the outside economies. In fact, what we see today is a form of structural mercantilism prevailing. In such a system, government structures and that of private co-operations too have been modified. These structural adjustments in return facilitate the trade interest of richer countries. And what richer countries continue to do is sustain a system of hegemonic stability.
In such a scenario, attempts to mitigate climate change will prove troublesome. This is because the resources of smaller countries are often funneled to the benefit of the developed world and the consumption levels often soar demanding the production of more goods. A shift or a reversal of this pattern will lead to instability or the rise of other powers, thus creating more competition and the usage of fossil fuel will invariably rise.
Both the cap-and-trade system along with carbon tax systems are not effective means of mitigating climate change. This is simply because countries such as the US and other economically-powerful countries will pay the tax but continue to produce as much emissions as they want. Such a precedent then motivates other developing nations to flout the carbon tax system laws. Often smaller countries argue that this law is in violation of a country’s sovereignty. The cap and trade system is also equally a farce in which larger companies are expected to pay for the rights to produce a certain amount of emission. But in a corporate world, especially in developing countries, the government is inevitably going to be bought or bribed into lazing the rules of the cap-and-trade system.
In fact, even in a developed country, some firms have so strong political influences that it is almost impossible to implement such rules. Moreover, larger companies have the financial capability to buy emission rights of smaller companies. The reason why these proposals dominate the discourse on mitigating global warming is because only developed countries have developed the sophistication to decipher the challenges meted out by global warming. The other reason is because developed nations believe setting up certain benchmarks can help reduce carbon emissions.
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