Lesson 3: Addressing Climate Change

Lesson Overview

This lesson, while not specifying answers to the climate change issue, will look at this issue through the lens of an economist and draw on economic principles to weigh various policies related to climate change. Three considerations will be addressed: 1) do nothing and let markets deal with the issue, 2) implement a cap-and-trade system, and 3) implement a taxation system.  Considerations will be viewed individually, noting strengths, weaknesses and uncertainties of each.  

Key Terms & Economic Concepts

Allocation Mechanism	Expected Marginal Cost	Long Run
Cap and Trade	External Cost	Market
Carbon Tax	Greenhouse Emissions	Short Run
Emission Permit	Greenhouse Gasses	Taxation
Expected Marginal Benefit	Internal Cost

Objectives

Students will be able to:

• Understand the concept of climate change
• Understand concerns related to climate change policies
• Explain current policies designed to deal with climate change
• Compare strengths, weaknesses and uncertainties of policy alternatives
• Apply scientific data collection when considering policy alternatives
• Identify ‘expected’ marginal cost and benefits related to climate change alternatives

Time Required

1 Class Period (50 minutes)

Materials

• Presentation Slides for Lesson 3
• Internet access and devices for accessing websites in lesson
• Handouts 1, 2, and 3 – 1 copy each for every group of 3-4 students

Lesson 3 Key Ideas

1. Scientific data along with economic reasoning should be used to make decisions regarding climate change policies.
2. A variety of policy considerations are available regarding climate change.
3. Each policy consideration has strengths, weaknesses, and uncertainties.
4. Major uncertainties related to climate change include the speed at which research and technological change can come up with possible solutions.