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Let Markets Solve the Climate Crisis

Author

Listed:
  • Kangasharju, Aki
  • Pakarinen, Sami
  • Spolander, Mikko

Abstract

Climate change is a fact, but its development and implications can only be directionally anticipated. The COVID-19 crisis shows that ending economic growth is not a viable response to the climate challenge, though it temporally reduces emissions. Rather than abandoning the free markets, we should improve its prerequisites of operation, make sustainable consumption decisions, and speed up technological progress and productivity growth. Thanks to the technological progress the future will be much brighter than the one anticipated by projecting historical trends far into the future. The corona crisis might speed up climate change mitigation and adaptation through record breaking fiscal and monetary stimulus. However, that is not enough and more action is needed. Most critical is to be able to make political decisions with efficient implementation and include all countries of the World to the common work party.

Suggested Citation

  • Kangasharju, Aki & Pakarinen, Sami & Spolander, Mikko, 2020. "Let Markets Solve the Climate Crisis," ETLA Brief 91, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:briefs:91
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    More about this item

    Keywords

    Climate change; Markets; Regulation;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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