Standard Economic Toolbox and the Challenges of Climate Change

Exam 3 Essay Question
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Discuss the quote above as part of a general discussion of the possibilities and limits of using our standard economic toolbox (e.g., price mechanism, economic growth, GDP per capita, profit incentive, etc.) to address the challenges of global warming
Exam 3 Essay Question
The standard toolbox focuses on established measures such as the GDP per capita and economic growth without necessarily considering contextual factors in different societies. For instance, what has been deemed acceptable often influences such as the 2° rise in global temperatures threshold for climate change and global warming (Seager, 2009). It is acceptable and tolerable for the rich countries to consider a 2° rise in the mean global temperatures as a safe bet, but it ignores the global South and impacts on island nations. Existing inequalities worsen vulnerabilities among marginalized and impoverished communities hard hit by climate change, and economic perspectives have failed to address climate change to improve the welfare for all.
The developed countries have more power and influence on policies adopted to address climate change, but the developing countries are disproportionately affected by climate. The World Bank and International Monetary Fund (IMF) promoted Structural Adjustment Policies were free markets and free reforms that required developing countries to open up their countries. Structural Adjustment Policies are one example of how policies are adopted supposedly to benefit developing countries, but instead, they are left worse-off. One of the challenges with climate change is apportioning the costs when developed countries accounted for global warming in the past and are still the major sources of greenhouse gas emissions.
Economic models and theories are helpful to understand and analyze different economic issues, but they are based on assumptions. Suppose there are wrong assumptions on the link between climate change and economic activities and a lack of perfect information. In that...