Answer to Question #54506 in Microeconomics for jared

Question

According to economic theory, under what circumstances should a government intervene in issues of climate change?

Answer 1

Decisions on global warming need to be made with incomplete information, and that decisions in the near term will have potentially long-term impacts. Governments might choose to use risk management as part of their policy response to global warming. For instance, a risk-based approach can be applied to climate impacts which are difficult to quantify in economic terms, e.g., the impacts of global warming on indigenous peoples.