Environment and the Sustainable Economy

Climate change presents challenges and opportunities for achieving environmental sustainability in a globalised economy. We explore the concept of a sustainable economy, focusing on the interplay between economic activities, environmental externalities, and global policy frameworks. The chapter introduces key theories, such as the Coase Theorem and the concept of negative externalities, to analyse environmental issues like pollution, resource depletion, and climate change. It evaluates market-based solutions, such as carbon pricing and green finance, alongside government interventions like regulation and subsidies, to address environmental challenges. The chapter highlights the globalisation of environmental impacts, including cross-border pollution and international cooperation through agreements like the Paris Accord. Empirical tools, such as discrete choice models, are presented to assess the effectiveness of environmental policies. By linking theory, policy, and practice, this chapter emphasises the urgent need for coordinated global efforts to transition towards a sustainable economy while balancing growth and environmental preservation.