Sample Economic Essay on Environmental Economy Today

Environmental Economy Today

In March, 2014 a report by Gallup indicated that more Americans were inclined to environmental protection over economic growth. However, the choice was correlated to economic stability, therefore, implying an economic decision (Swift n. p). The issue of environmental protection has become a global concern due to the extensive and severe effects of climate change. It has been reported that a 0.7oC rise in temperature has occurred since 1990, and the global warming has caused unpredictable weather patterns as well as melting of the ice in mountains. Anxiety is also mounting over increased levels of air pollution and deforestation. The culpability of environmental degradation and climate change consequences is on human activities, in the course of consumption of natural resources and in industrial production. Production and accumulation of greenhouse gases has been the cause of global warming together with deforestation. Particularly, carbon dioxide emission has been a major source of greenhouse gases due to the extensive consumption of fossil fuels (Lu 1). In order to control this negative externality, one of the public policy measures adopted by some nations has been the enactment of carbon taxes.

Carbon tax is a form of Pigovian tax by imposing a unit tax on carbon dioxide pollution emissions, calculated as per ton emission (tCO2). Economically, the tax acts as an incentive to industries in reduction of carbon emissions. By introducing this incentive, the marginal cost increases as an industry reduces emissions to acceptable levels by the society, therefore, leading companies seeking alternative cleaner fuels or coping with reduction (Taschini 3). The trick with carbon tax is setting the appropriate tax per unit emission that would acceptable, and not too low to have negligible compulsion to reduce emission (5).

In America, carbon tax has not been adopted nationally, and there are debates concerning how the taxation will be done, and the use of the revenue generated. Majority of Americans support introduction of carbon taxes, with 60 percent saying that the revenue generated should be used for research on renewable energy. Also, the support fluctuates for different uses of the revenue, with opposition of using the raised revenue to increase government revenue (Amdur et al. 1). According to Carbon Tax Center, an organization in favor of the carbon tax, introducing the tax would be the most effective policy that would sharply decrease carbon emissions as well as change consumption trend and energy production practices (Komanoff n. p). Another concern on the introduction of carbon tax has been on its perceived direct effects on the economy. Firstly, imposition of tax on goods and services that rely heavily on carbon fuels, will automatically lead to increased prices. Failure to have clear uses of the revenue generated would affect due to decreased purchasing power of the people. Consequently, the real wages of workers will be affected, hence discouraging people from working, leading to labor shortages. The effect will be harsher to low-income earners who spend a large proportion of their income on the goods that cause intensive emissions (Dinan 1).

In conclusion, climate change is a burning issue that needs quick intervention before the consequences become more severe. Therefore, as people debate about the fairness of introducing a carbon tax, they should not forget the long-term benefits associated with it. In 2007, researchers estimated the social cost of carbon emission to about $ 27 per tCO2 of emission (2). Hence, further delays in implanting a viable emission reduction policy would mitigate catastrophic risks of deteriorated climate change.







Works Cited

Amdur, David., Borick, Christopher, and Rabe, Barry G.  “Public Views on a Carbon Tax Depend on the Proposed Use of Revenue: A report from the National Surveys on Energy and Environment.” Issues in Energy and Environmental Policy Number 13. July. 2014. Web.  6 Oct. 2014.

Dinan, Terry. “Effects of a Carbon Tax on the Economy and the Environment” May. 2013. 1-20 Web.  6 Oct. 2014. <>

Komanoff, Charles. “Why taxes on carbon pollution are essential, what’s happening now, and how you can help” Carbon Tax Center. N. p., 2014. Web.  6 Oct. 2014. <>

Lu, Zhen Jane. “Achieving carbon reductions in the Chinese economy: An examination of policy options.” Diss. University of Southern Queensland, 2012. Web.  6 Oct. 2014.

Swift, Art. “Americans Again Pick Environment over Economic Growth: Partisan gap over priority largest recorded.” Gallup. N. p., 20 Mar.  2014. Web.  6 Oct. 2014. <>

Taschini, Luca. “Environmental economics and modeling marketable permits.” Centre for Climate Change Economics and Policy Working Paper No. 34 (2010): 1-21.Web. 6 Oct. 2014.<>