Non-National and Other Approaches to Emissions Reduction Why More Attention Should Be Given by Economists

Abstract

Climate change policy has been set back by politics in the United States (US) and Australia as the US withdraws from the Paris Agreement and as the Australian government abolished the carbon pricing mechanism. Given the political gridlock at the national level, this article argues that non-national policies are not necessarily economically inferior despite the greater efficiency and scale of national policies. To argue this point, the general theory of second best is used (Lipsey & Lancaster, 1956), there is a review of some sub-national emissions reduction policies and the potential of behavioural economics in climate change is mentioned. The article finds that there is great potential and scope for the implementation of non-national climate change policies.