Working Paper: NBER ID: w16104
Authors: Severin Borenstein
Abstract: Human activity has disrupted the natural balance of greenhouse gases in the atmosphere and is causing climate change. Burning fossil fuels and deforestation result directly in about 9 gigatons of carbon (GtC) emissions per year against the backdrop of the natural carbon flux -- emission and uptake -- of about 210 GtC per year to and from oceans, vegetation, soils and the atmosphere. But scientific research now indicates that humans are also impacting the natural carbon cycle through less-direct, but very important, mechanisms that are more difficult to monitor and control. I explore the challenges this presents to market or regulatory mechanisms that might be used to reduce greenhouse gases: scientific uncertainty about these indirect processes, pricing heterogeneous impacts of similar human behaviors, and the difficulty of assigning property rights to a far larger set of activities than has previously been contemplated. While this does not undermine arguments for market mechanisms to control direct anthropogenic release of greenhouse gases, it suggests that more research is needed to determine how and whether these mechanisms can be extended to address indirect human impacts.
Keywords: carbon emissions; greenhouse gases; carbon cycle; market mechanisms; climate change
JEL Codes: H23; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Anthropogenic activities (Q54) | Carbon emissions (Q54) |
| Carbon emissions (Q54) | Natural carbon cycle (Q54) |
| Human activities (Q59) | Atmospheric CO2 levels (Q54) |
| Small perturbations in the natural carbon cycle (Q54) | Atmospheric CO2 levels (Q54) |
| Human activities (Q59) | Challenges in carbon pricing (D49) |