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Unscientific assumptions in economic theory are undermining efforts to solve environmental problems.

It Is not immediately obvious what role financial markets can play in addressing climate change. Climate change happens slowly and has a global impact on the physical environment, whereas financial markets react to news in fractions of a second and are almost liberated from specific physical locations. the low energy intensity of the financial sector means that reductions in greenhouse gas (GHG) emissions would have little impact on the physical operations of financial markets and institutions. March 2008

Climate science tells that the earth is warming as a result of human activities. But considerable uncertainty regarding the precise nature and extent of the risks remains. Economists are needed to develop sensible policies to address these risks, which account for the uncertainties.

Addressing climate change and the economic damage it will likely bring presents policymakers with a dilemma. The benefits of policy action are uncertain and would accrue largely to future generations, whereas the costs of policies run the risk of being more immediate and extensive. At the same time, the costs of inaction are irreversible, potentially catastrophic, and likely to hit poorer countries harder than developed ones.

Do the math: affordable new technologies can prevent global warming while fostering growth. March 2008