Economic Theory Reducing Pollution and Global Warming

Many of the economies based on capitalism may not favor the workings of free trade as they are developing towards self-sufficiency. Furthermore, these capitalistic economies may not even support fair trade, as it may seem that all the poorer countries may destroy or exhaust all of their natural resources to get rich in a very short period of time. Poorer countries would then eventually be more responsible for a shortage in the supply of these scarce resources and more importantly- will be adding huge problems in controlling environmental issues such as global warming and pollution (Hackett, 2001). However, these thoughts may also be disagreed, as, in recent years, there has been a tremendous effort and attempts to fuse the environmental concerns with the studies of economics (Pearce, 1993).Usually, the Gross Domestic Product (GDP) is measured in a way that it only includes and calculates the value of those goods and services that are paid for. Since there may not be any sub-classification of these goods and services, they may be inclusive of those that reduce the overall quality of life and be very harmful to the environment (Pearce, 1993). On one hand, where they may be adding to the GDP of the economy and giving a healthy indication showing progress, on the other, it may be raising concerns such as pollution and global warming. For example, the services and resources used to clean up an oil spill will have an incremental effect on the GDP as people will be paid for their services of the clean-up (Hackett, 2001).Many economic theorists have made an attempt to provide an alternative method of calculating national income than the simpler model above. To make the calculations take into consideration the factors of being environmentally friendly has been long debated now but progress on a stable sustainable measure has been very limited with fewer applications and existence in the economic indicators.

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