ECONOMICS OF A WARMING PLANET

Beyond ecology, climate change reflects deep economic failures—free riding, public goods, and markets unable to price planetary risk

- KRISHNA GUPTA

In the Climate Change series, we have covered international negotiations on climate change under the aegis of the United Nations Framework Convention on Climate Change (UNFCCC), mitigation and adaptation measures, climate finance, climate justice, and carbon dioxide removal (CDR).

In the article The Science of Climate Change, published on January 4, 2026, in this paper, I also discussed the contributions of the pioneers in this field: Fourier, Tyndall, Arrhenius, and Keeling. In the next two articles, we will discuss the economics of climate change and related issues.

To recap, the central issues in climate change are as follows:

» Greenhouse gas emissions (mainly carbon dioxide) are a result of economic growth, which has been fuelled largely by fossil fuels.

» The annual flow of greenhouse gases contributes to the buildup of the stock of greenhouse gases. The stock of greenhouse gases at any time is a function of the carbon cycle, which is essentially the exchange of carbon atoms between the atmosphere, Earth, oceans, and living organisms through the processes of photosynthesis, respiration, decomposition, combustion, sedimentation, and weathering. In other words, much of the carbon emitted by anthropogenic activities is absorbed by the oceans and forests, while the rest finds its way into the atmosphere.