Question

Climate Change will have a disproportionate impact on developing countries. Many economists have proposed a tax on carbon on other greenhouse gases (generally referred to as a “carbon tax”).

a) Why do economists favor such a tax? What are the limitations of such a tax?

b) Suppose a carbon tax is not politically feasible. Design an alternative
policy, or set of policies, to lower greenhouse gas emissions.

c) Do you think your proposal is politically and economically feasible?

Answer 1

A. Economist favors such tax as there is a general tendency of people that "no one likes to pay tax" As it reduces their personal disposable income. Hence, application of tax will discourage more carbon emission. Limitation of such tax is that it may discourage necessary industrial Activities.

B. Other policies could be a use of cleaner fuels. Government should provide subsidy to firms using clean fuel as it would encourage them to do so and eventually will help in pollution reduction.

C. Yes I think the proposal is politically and economically feasible.