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Economics of global warming

There are a number of policies that governments might consider in response to global warming. The assessment of such policies involves the economics of global warming.Global warming is a long-term problem. One of the most important greenhouse gases is carbon dioxide. Around 20% of carbon dioxide which is emitted due to human activities can remain in the atmosphere for many thousands of years. The long time scales and uncertainty associated with global warming have led analysts to develop ""scenarios"" of future environmental, social and economic changes. These scenarios can help governments understand the potential consequences of their decisions.The impacts of climate change include the loss of biodiversity, sea level rise, increased frequency and severity of some extreme weather events, and acidification of the oceans. Economists have attempted to quantify these impacts in monetary terms, but these assessments can be controversial.The two main policy responses to global warming are to reduce greenhouse gas emissions (climate change mitigation) and to adapt to the impacts of global warming (e.g., by building levees in response to sea level rise). Another policy response which has recently received greater attention is geoengineering of the climate system (e.g. injecting aerosols into the atmosphere to reflect sunlight away from the Earth's surface).One of the responses to the uncertainties of global warming is to adopt a strategy of sequential decision making. This strategy recognizes that decisions on global warming need to be made with incomplete information, and that decisions in the near term will have potentially long-term impacts. Governments might choose to use risk management as part of their policy response to global warming. For instance, a risk-based approach can be applied to climate impacts which are difficult to quantify in economic terms, e.g., the impacts of global warming on indigenous peoples.Analysts have assessed global warming in relation to sustainable development. Sustainable development considers how future generations might be affected by the actions of the current generation. In some areas, policies designed to address global warming may contribute positively towards other development objectives. In other areas, the cost of global warming policies may divert resources away from other socially and environmentally beneficial investments (the opportunity costs of climate change policy).
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