17.3 The Challenge of Global

Climate Change

So far in this chapter we have discussed the general case of
environmental externalities and the types of policies that can be used to
address them. We now go on to examine the particular case of global
climate change, undoubtedly the most complex environmental externality
the world has ever seen. Recall that a negative externality is an example
of a market failure, where the private market fails to take account of the
external cost associated with the production or use of a commodity. There
is now an overwhelming consensus in the global scientific community
that the burning of fossil fuels and the resulting emission of greenhouse
gases is directly affecting the global climate and raising Earth’s average
temperature. Correcting this market failure will require coordinated
actions by all countries. It is no surprise that global climate change has
been described as the “mother of all externalities.”

In this section we review the basic facts about the emission of greenhouse
gases, their accumulation in the atmosphere, and the effects on Earth’s
climate. In addition, we examine the case for global collective action to
reduce these emissions. Finally, we discuss the considerable technical
challenges that must be overcome if emissions are to be reduced on a
scale sufficient to stabilize Earth’s climate. As will become clear, the issue