The Case for Global Collective Action
The emission of greenhouse gases is a negative externality. Many
production and consumption activities of individual firms and households
emit greenhouse gases, and thereby impose costs on others. But because
they are not required to incorporate these external costs into their own
calculations, most firms and individuals act as if these external costs do
not exist. As a result, they carry out too many of these polluting activities
relative to what is socially optimal; the market outcome is allocatively
inefficient.
One of the predicted effects of ongoing climate change is the increasing
frequency and severity of extreme weather events, such as the massive
flood in Calgary in 2013.
Jonathan Hayward/The CP Images