Can the market regulate environmental issues?

Pages: 12 (2877 mots) Publié le: 23 novembre 2009
We can define economy as a realized social system of production, exchange, distribution and consumption of goods and services of a country or other areas.
Nowadays, the concept of free market is the tool which allowed such a real development of the international trade. It allows people rather than the State to take most of the decisions related to economic activities and transactions.
It is oneof the main goal of the theory of Liberalism.
In economy, this theory is based on the belief that there is a strong line between politics and economics. It recommends minimal state intervention and free markets, but also individual equality and liberty. It considers that the individual consumer is the basis of the society. So, individuals are supposed to behave rationally and to attempt tosatisfy certain values at the lowest possible cost to themselves. But this theory assumes that all participants have complete information about the market.
With such a development of trade and industrialization during the last decades, we can wonder about the effects it had on the environment.
By knowing that the massive industrialization has been producing serious environmental issues, what we canwonder now is if the market can regulate environmental issues?
We will at first see that the development of the market permitted the creation of several institutions and treaties aiming to regulate the negative effects of the industrialization. But then, we will deeply consider these institutions and see if their work is really reliable and efficient.

The first thing to say is that theindustrialization has caused many negative effects on the environment.
The main issue of this industrial development is global warming, which is defined as the increase of the average measured temperature of the Earth's near-surface air and oceans.
According to scientists, this increase is due to the greenhouse gas emissions, mainly coming from human activities.
Facing this global warming issue, theKyoto protocol was created in 1997 in Japan. This treaty is aimed to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous human interference with the climate system. It is also an attempt to conciliate economic development and environmental contraints.
To write this treaty, several specialists from many differents fields such as jurists, industrialistsor meteorologists were asked to intervene. And then, all of their opinions were gathered.
From scientific data ( the impact of a ton of carbon dioxide loose in the air) and economic data ( impact on the growth), in a juridical given framework (an international agreement), they tried to define an optimal situation (that is to say a limit of pollution) to reach and to find a number of tools whichwould permit to reach that objective.
It's a compromise between two other positions: the one of the deep ecology partisans who want to cancel carbon emissions and the other one of ultra-liberalists who think that nothing should hinder the growth and that the environment would naturally include itself in the prices.
This Kyoto protocol is composed by several flexible mechanisms such as EmissionsTrading,Clean Development Mechanism and Enforcement.
The first one, the concept of Emissions Trading is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It requires that a country which has ratified the protocol must reduce its emissions 5,2 % below its baseline (that is to say 1990) over the 2008 to 2012period.

Usually, a government sets a limit on the amount of a pollutant that can be emitted. Then, companies are granted with emission permits and have to hold an equal number of credits, which actually represent the right to emit a certain amount of pollutant. And the total amount of credits cannot exceed the limit set by the government. Some who would need to buy more credits to increase...
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