Approaches to the economics of climate change : a survey

Abstract

Climate Change is receiving increased attention over the years, in particular after the ratification of the Kyoto Protocol (signed in 1997 and effective in 2005), and after Stern's Review (2006). As such, the climate change phenomenon is being studied from all possible fields of study and fields of research, including economics. The economics of climate change looks and studies how climate change affects the economy and economic activities, as well as how human behavior and economic activities contribute to climate change. The purpose of this survey is to introduce and document various economic approaches to the issue of climate change. In particular, we highlight market approaches as well as non-market approaches that are linked to the climate change issue. In a broader perspective, we aim to look at the current existing approaches, that can be useful in identifying different paths of action or different approaches to global climate change. Organization of the paper. The narrative flow is presented as follows: we begin with the definition of climate change and its importance to economic development. We focus on the role of climate change in economic activity and vice versa (the role of economic activity on climate change). Next comes the representation of economic approach in mitigating and adapting to climate change, with sustainability as the long term objective. A section on various real-life behavior in coping with climate change follows. A conclusive summary is presented at the end of the paper.