Climate is, in economic terms, an externality. The pursuit of conventional economic growth, particularly through production and energy processes, can cause incremental changes to the biosphere that are not directly willed. Moreover, even if these biosphere changes and impacts generate a cost, these are usually not felt or are perceived extremely weakly by the relevant economic actors in comparison to the benefits of economic action. While new non-polluting production processes may well eventually be discovered, a change in global economic values reducing demand for energy and greenhouse gas (GHG)-intensive production of goods might occur, and consumer demand might become sensitive to GHG footprints of goods and services, it is nonetheless unrealistic to expect revolutionary changes for these factors in the short term.
Reducing GHG pollution and climate impacts is economically inefficient from the perspective of most individual economic actors. However, if legal obligations are created and enforced to bind on all relevant actors, then this problem should not exist. The “tragedy of the commons” will be avoided by the action of a superior power capable of constraining all those who consume the commons. No economic actors will welcome the cost imposition but at least the legal obligation will seem fair. Read more. Source | International Center for Trade and Sustainable Development