Life Sciences | Medicine and Health Sciences


As concern over climate change garners attention the question of whether it is happening gives way to what policymakers should do about it. The question of policy is an economic one. This research is necessary because climate change, left unchecked, threatens to permanently change our environment.

In Economic terms, CO2 emissions would be described as an externality. The industries that produce the pollutant do not pay for the damages they inflict on the environment. Economists have deliberated on such externalities before. In a classic experiment, Plott argued that policy measures to internalize these externalities were necessary. That is, policies that include the cost of pollution in the economic decisions made by firms and consumers should be enacted. His reasoning, and experimental results, suggested that mere concern over the welfare of others is not sufficient to protect society from environmental damages (1983).

Plott, however, did not consider a further complication of environmental economics. A politically attractive solution to climate change is to support research and development (R&D) as an answer to climate change. The studies I consider here will consider this question in conjunction with methods of internalizing climate change externalities.