Climate Change and its Consequences
Climate change is wreaking havoc on businesses, ecosystems, and societies. Rising global temperatures mean not only milder winters, but also excessive heat in some locations. Also, due to the rising amount of energy trapped in the warming atmosphere, drought, flooding, strong storms, and other extreme weather conditions may develop. One of the most serious consequences of climate change is the impact on water resources, which are linked to socioeconomic issues such as health, food supply, and ecological integrity. Climate change consequences have been documented in areas such as Canada's different geographical regions, according to study ("Impacts of climate change," 2010). Canada’s forests, which support different species and ecosystems, are expected to be among the most affected by climate change. While taking into account today’s rapid industrialization, governments should act to minimize global warming by taking concerted measures to reduce the dangerous levels of Greenhouse Gas (GHG) emissions.
Greenhouse Gases and Global Warming
Some gases today are believed to trap the heat from the sun and prevent it from escaping back into the atmosphere. Most of the gases occur naturally, but human activities, such as deforestation, increased the use of nitrogen fertilizers, and burning coal, oil, and gas are increasing the concentration of them in space, particularly methane, CO2, nitrous oxide, and fluorinated gases. Out of these GHGs, CO2 is the most produced by human activities, and it accounts for over 64 percent of man-made global warming (Withagen & Maria, 2016). Although the other gases are produced in small quantities, they accumulatively trap a significant amount of heat more effectively than even CO2. In fact, one of the gases, namely methane, traps approximately 17 percent of man-made global warming.
The Goal of Keeping the Warming Below 2°C
Currently, the global average temperature is estimated to be 0.85 percent higher than it was one century ago (White, Wolf, Anslow, Werner, & Creative, 2016). Indeed, each of the past few decades has been warmer than the preceding ones. Some of the world’s top scientists believe almost certainly human activities are the primary cause of the increased warming observed since the middle of the previous century. However, most of them agree that an increase of 2°C from the temperature during the pre-industrial period is the threshold beyond which much of the risk that catastrophic changes will occur may arise. It is in this light that the international community recommends the need to keep the warming below 2°C. This goal cannot be achieved without sustainable development from an ecological economics point of view.
The Concept of Ecological Economics
Since the term ecological economics emerged in the 1970s, its definition has been filled with controversies. Ideally, for any measure to be regarded as sustainable, it must be ecologically prudent, socially desirable, and economically viable (Jednak & Kragulj, 2015). This concept recognizes that other factors also contribute to the well-being of humans besides the health, education, social capital, and the earth’s contribution, as well as its physical and biological systems. The goal of this field is to create a solid scientific understanding of the complex connection between human and natural systems. Moreover, ecological economics aims to use that knowledge in developing effective policies that can create an ecologically sustainable world.
Moving Beyond Conventional Economics
Unlike conventional economics whose goal is to increase goods and services provided by human industries, ecological economics aims to expand the economic theory to integrate people's health, values, and well-being. One of the major issues with conventional economics is the assumption that the ever-rising GDP is necessary, possible, and that it benefits everyone. On the other side, ecological economics seeks economic efficiency, which cannot be achieved without considering all the costs and benefits involved in achieving sustainability. In most cases, today’s market prices do not address the full costs of various economic activities that exhaust valuable resources or injure natural systems. Some of these activities inflict significant costs on social and human capitals attributed to pollution. The inclusion of such costs in the market provides a powerful incentive to propel the world towards sustainability.
The Impact of Global Warming on Sustainable Development
The emergence of the issue of global warming in the 1990s had an enormous influence on the debate regarding sustainable development in two major aspects, namely the environmental risk management approach and balancing the trade-off between the environment and economic growth. In the first aspect, the idea of prudence yields the most appropriate concept of precaution. The ecosystem uncertainty in the context of global warming and its prevention based on the Precautionary principle underlines the other aspect mentioned given that reduction of GHG emission is costly. Well, there exist some trade-offs between the environment and economic growth, but they can be reduced if the set of policies proposed at the Rio 92 conference are adopted.
The Role of Markets and Regulations
The idea of sustainable development in its current disguise of green economy reflects the issues of trade-off in that it includes the need for applying sustainability measures while taking into consideration the environmental risk. What is more, the inexistence of the alleged compromise is reaffirmed, but it reinforces the arguments based on expectations of developments in economic, social, and environmental technologies. Taking into account the assumption that there is no restriction to the increased efficiency in the utilization of natural resources, the environmental problem is seen mainly as market failure. In this sense, an effective environmental policy should attempt to create the favorable conditions for economic agents to incorporate the costs of degradation they cause.
Market-Based Approaches to Reduce Emissions
Ideally, the global warming issue can be resolved by pricing the regulating services like any other environmental externality created by a market failure in the utilization of public resources. In this light, as the cost of global warming increases, the market should encourage the invention of solutions that seek to reduce the cost of controlling GHG emissions. Moreover, state action is required to amend this market failure through privatization. Once the failures have been corrected, the dynamics of intertemporal allocation of limited resources founded on cost-benefit assessments tend to be processed efficiently without various issues, like the risk of irreversible losses and uncertainty.
Selecting Effective Strategies
The costs mentioned in the previous section depend on different factors, including the type of regulation used to mitigate the emission, the growth of GHG emission in the absence of policy amendments, policies adopted by other countries, and the extent to which consumers and producers can regulate emission-intensive without lowering their material well-being. One of the dilemmas facing policymakers today is choosing whether to use either the common regulatory strategies, such as setting the standards for machinery, or adopting market-based approaches, like imposing taxes on GHGs emissions and establishing cap-and-trade initiatives. Research shows that the market-based approaches can reduce the emissions at a lower cost than by conventional regulatory techniques (Dinan, 2010). Whereas the conventional means impose certain requirements that may not be the least costly in reducing emissions, the second approach provides more latitude for organizations and households in determining the most cost-effective way of achieving that goal.
The Advantages and Challenges of Cap-and-Trade
Cap-and-trade proposals restrict the amount of emission GHGs that can be produced over a given period. Under these programs, market forces yield an allowance price equivalent to the incremental cost of satisfying the cap. Moreover, the fact that carbon trading does not generate the lowest cost shows that the best a cap can do is to reduce the price that major polluting companies have to pay to meet the short-term reduction targets. Simply put, the cap would enable polluters to achieve their reduction targets over a few years without implementing the structural changes needed for long-term reduction goals and, hence, the transition to a low-carbon economy. The structural investment in the field of non-fossil fuel has to start now not in a decade's time because the longer the delay, the more people will have to pay.
The Importance of Monitoring and Verification
Further, the effective implementation of GHG cap requires the capacity to track and verify reported emission reductions. According to recent research, trading systems cannot reduce the costs of emissions reduction goals without an extensive, accurate, and uniform measurement system (Cap and trade are the most cost-effective ways to reduce emissions, 2016). Some of such systems exist for CO2 but not for other GHGs; an example of such equipment is the continuous emissions monitor for CO2. Although monitoring devices are not widely available to monitor the quantities of pollution emissions, the widespread adoption of such devices should not be taken for granted as far as it would make little sense giving polluters pollution quotas where verifiable measurements will not be made.
Addressing Issues of Dishonesty and Pricing
The lack of an adequate monitoring system only worsens cases of dishonesty that are inherent in trade schemes where the sellers and buyers have a strong motive to conceal areas where reductions are made and where permits are traded equivalent to offset credits. Such problems can be addressed with an upstream monitoring system (Cap and trade are the most cost-effective ways to reduce emissions, 2016). The system is upstream in that it should measure the quantity of fossil fuels emanating from the underground rather than those being burned.
Economical Measures for Sustainability
Further, it is noteworthy that not every clean option is expensive. The study by Shrestha, Ahmed, Suphachalasai, and Lasco (2012) identifies various technological measures that are economical even without the climate policy interventions. These recommendations include the use of energy-efficient lamps, solar cooking stoves, and air conditioners in both commercial and residential sectors. Additionally, energy-efficient diesel boilers and electric motors should be introduced in the industrial sector.
The Role of Ecological Economics in Sustainable Development
As can be seen from this discussion, ecological economics in the broadest sense addresses the connection between economic systems and ecosystems. Such relationships are the locus of some of today’s most pressing issues like global warming. In this context, ecological economics should be understood as a means of improving human well-being based on an energy production that provides the comfort deemed appropriate and that is consistent with the thermodynamic limits of the earth. Overall, policy, financial issues, and technological access will continue to impact the development of sustainable technologies and the shift toward low-carbon in the world.
References
Cap and trade are the most cost-effective way to reduce emissions. (2016) (1st ed., pp. 1-3). Retrieved from http://www.virlab.virginia.edu/Energy_class/Lecture_notes/Where_do_we_go_from_here-Cap_and_Trade_Carbon_Tax_Supporting%20Materials/Merril%20Lynch%20-%20Cap%20and%20trade%20is%20the%20most%20cost-effective%20way%20to%20reduce%20emissions%20-%20FERN.pdf
Dinan, T. (2010). Managing allowance prices in a cap-and-trade program (1st ed.). DIANE Publishing.
Impacts of climate change. (2010). David Suzuki Foundation. Retrieved 17 May 2017, from http://www.davidsuzuki.org/issues/climate-change/science/impacts/impacts-of-climate-change/
Jednak, S., & Kragulj, D. (2015). Achieving Sustainable Development and Knowledge-Based Economy in Serbia. Management - Journal For Theory And Practice Of Management, 20(75), 01-12. http://dx.doi.org/10.7595/management.fon.2015.0015
Shrestha, R. M., Ahmed, M., Suphachalasai, S., & Lasco, R. (2012). Economics of reducing greenhouse gas emissions in South Asia: Options and costs. Asian Development Bank.
White, T., Wolf, D., Anslow, D., Werner, A., & Creative, R. (2016). Indicators of Climate Change for British Columbia 2016 Update (pp. 1-57). British Columbia Ministry of Environment. Retrieved from http://www2.gov.bc.ca/assets/gov/environment/research-monitoring-and-reporting/reporting/envreportbc/archived-reports/climate-change/climatechangeindicators-13sept2016_final.pdf.
Withagen, C., & Maria, A. (2016). Green and Grey Paradoxes. Lecture, Vrije Universiteit Amsterdam.
