In the 21st century the environmental issues are becoming more recognized by the business community, most of the nation states and by the public in general. The recent natural disasters like the tsunami, other extreme weather patters and their impact on human life and on the economic cost and on economic activity shows the importance of stabilizing and reducing emissions by concerted action and effective polices on a global scale. According to the climatologist and scientists the global warming is a real threat and it is accepted by most of the governments of the world.
However, the actions and the process of developing policies and implementation at the current moment is very complex and the response is inadequate and there is lost of conflict between the developed and third world on the methods to control emissions and the phase they must reduce emissions.
There is considerable debate about the methods of reducing the emissions and also controversy among economists of different schools how to reduce emissions with minimum cost and the reliance of the market mechanism to resolve the issue after setting the emission target. This also may be a factor delaying the development of appropriate strategies to reduce emissions. However, the major environmental economics is based on neoclassical economics and it is the mainstream of the environmental economic theory. The solutions they advocate is to develop an emission trading system, better defined property rights and taxes and tariffs, such that pollution occurs only if the benefits of production exceeds the cost of emission. The effectiveness of these policies is highly debatable and there is evidence that it has worked to some degree in United States after they implemented the emission trading system in accordance with the Clean Air Act.
However it has to be said that the pollution reduction is very slow and not adequate and still USA has to go a long way to stabilize its emissions and other policies must be applied like strict government regulation as well as introducing the principles of sustainable development in all sectors of the economy and also must have a global approach in reducing emissions as this is a global issue.
The market mechanism in itself will not be sufficient although it must play a crucial role at least where the market is the main economic system in a country. That is the strategies must not be based on neoclassical economy for all countries because they may not work in some countries where they have a different socio, cultural and political environment where markets are not an efficient method to control emissions. This is particularly relevant to third world countries.
In essence, to control emissions every country must develop their own unique policies and strategies depending on their social, political and cultural environments and there must be a well coordinated action in a global scale as it is a global issue and must not develop theories only using one school of economic thought and must have a multi theoretical perspective to develop their strategies and policies. The principles of sustainable development of alternative political economy perspectives also must be considered to formulate effective environmental policies and government must play a crucial role in regulation of industry to sole extent and must not rely on self regulation alone on an ideological sense. On the basis that no theory is effective in all conditions and every economic theory has its own weaknesses it is also advisable to have a multi theoretical perspective based on this proposition to develop a well coordinated strategy is advisable given the complexity of the issue and the relationship between the environment and the economy.
