Climate Policy Goes Mainstream A New Priority Distinct from Laissez-faire, Which Supports Welfare and Equity

Abstract

The paper analyzes the long pathway of environmental issues from their start as a highly specialized field to becoming part of mainstream economics. The visibility of global warming and the Paris goal to limit global warming have supported this process, along with concepts ranging from externalities to public goods and cost-benefit analysis. However, we see that most countries are not on track towards reaching climate neutrality early enough to prevent disastrous increases of temperature, due to market and policy failures. Instruments to curb global warming, along with their limits and advantages, are analyzed. Strategies in sectors and countries will have to be different. International cooperation must limit negative spillovers, and it has to support learning processes while enforcing synergies. The article concludes that the problem has become mainstream in economics, but nevertheless requires an interdisciplinary approach.