A wicked problem.

Is one whose definition is a normally elusive, and also we cannot find a definitive
solution. it is difficult to reach a consensus. A consensus such a definitional level, but also consists us
at a solution level.Because you have multiple and the divergent interests, traditions, ideologies and
values. So wicked problem tend to have many stakeholders. And in attempt at trying to find a
solution. We will have multiple consequences or multiple impacts. Of those solutions. Will have
cascading effects across the society, so it will affect many, many, many parties in the society or ;any
stackholders in the society. And wicked problems do not have a right or wrong answer or solution.
And the judgement, the value judgement about what is right and what is wrong. Goes beyond an
objective standard. The interpretation of whether the solution is right or wrong. Subjective, so this
will be shipped by. The beliefs and values of the different stakeholders.

(the climate change debates around the world, you're going to see that indeed. There are multiple
perspectives, so we can for example, cite to divergent views. You have those that are calling for.
Immediate action to resolve the climate crisis. And normally these are environmentally, ecologically
minded individuals. But you have those that try to protect economic interests and they will argue
against a radical solutions.They will normally argue that climate change has always climate has
always changed.So they will try to protect economic or political interests by arguing for doing
nothing.)

So in other words, there is a trade off, so you know you need to invest in dealing with this problem at
the expense of other priorities. This can raise a lot of policy difficulties, but also political difficulties
for the policy makers and other decision makers.

the developing countries are very much vocal overs on pushing for loss and the loss and damage
agenda. But the rich countries are not keen, are not very keen on that agenda because it entails that
they need to take up more responsibility. To fund climate related programs in the developing.
Countries so often the the the attentions between the different different parties. But also, if you look
nationally also, these tensions do manifest themselves when it comes to, you know, what policy
option are best.

So when you look at the technocrats and also the the politicians, you, you, you find a lot of
interesting discussions at the national level in terms of what needs to be done. I gave you an example
of carbon tax in my eyes. So carbon tax, the people's the intention. Was to accumulate resources that
would go towards Community interventions, but that money gets diverged or, you know, and into
other other priorities. So all these are issues that as policy makers, we need to be aware of that when
you are dealing with the climate change issue, the lot of political and economic interest and the
these will lead to divergent in opinions in terms of what needs to be done.

So climate change is a problem of market failure.

Climate change is a prime example of market failure, arising from the inability of markets to account
for the negative externalities associated with greenhouse gas emissions. Historically, heavy emitters,
such as industries and nations reliant on fossil fuels, have escaped fair responsibility for the pollution
they generate. This has resulted in a "global public bad," where the shared atmosphere—a critical
system for regulating the planet’s climate—has been polluted without sufficient accountability. While
a few entities have profited significantly from activities like oil and gas extraction, the detrimental
consequences, including environmental degradation and climate risks, affect everyone. Economically,
climate change is viewed as a global stock externality, where the flow of greenhouse gas emissions
accumulates into a long-lasting carbon stock in the atmosphere. These emissions, which remain in
the atmosphere for extended periods, reflect historical and ongoing activities, posing risks to human
and environmental well-being. This inequity highlights the urgency of addressing the
disproportionate burden borne by society compared to the profits gained by a few, emphasizing the
need for systemic change to mitigate and adapt to climate challenges.

So if even if we had to decide to change our ways now, if we decided to reduce to drastically reduce
our emissions, but that will not have an immediate impact. So for example, if we decide that reduce
emissions in anyone year, that change will not immediately lead to drastic effect or drastic reduction
in emissions in the atmosphere, because we already have plenty of the gases where, you know,
concentrated in the atmosphere.

Climate change is a clear example of market failure, where the true costs of pollution are not paid by
those causing it. For example, industries and countries that produce large amounts of greenhouse
gases, like from burning oil and gas, have historically avoided taking responsibility for their pollution.
This creates a "global public bad," where the shared atmosphere—used by everyone—is polluted,
and the costs are passed on to society, especially to those who pollute the least.

One example mentioned is the carbon trading system. Developed countries often encourage
developing countries to preserve forests or create reforestation programs, claiming this helps offset
emissions. However, critics argue that this is a form of greenwashing, where these rich countries
make it look like they care about the environment while continuing to pollute and profit. They fund
projects in developing countries to absorb their emissions, but the damage from their pollution still
affects everyone.

Another issue is information asymmetry, where some people or organizations have more knowledge
than others and use it to their advantage. For instance, in the carbon market, those with insider
knowledge—like companies owning carbon credits—can manipulate the system to profit, similar to
how insider trading works in the financial world. This creates unfair outcomes, as those without this
knowledge often lose out, and pollution continues unchecked.

The professor also gave a simple analogy of a bathtub: when you fill it with water but don’t stop or
manage the flow, it overflows. Similarly, greenhouse gases build up in the atmosphere over time, like
the water in the tub, and cause global warming. These gases stay in the atmosphere for a long time,
reflecting decades of emissions.

In summary, climate change is a market failure because industries and countries do not fully pay for
the damage they cause. Instead, society, particularly poorer countries and vulnerable people, bears
the costs, while a few profit unfairly.

Market failure in the context of climate change is also driven by incomplete information and
uncertainty. There is often a lack of accurate or sufficient information about the full impact of
pollution, which complicates the functioning of the market. This uncertainty makes it difficult for
both governments and businesses to take effective action.

For example, carbon trading systems have faced criticism, particularly when it comes to carbon
sequestration programs between developed and developing countries. The idea is that developing
countries can help absorb carbon emissions through forest conservation, while developed countries
fund these projects. However, some argue that this is just a way for developed countries to justify
their emissions while continuing to pollute, without actually making real changes.

Another issue is lobbying, where powerful corporations and rich countries use their influence to
block meaningful climate agreements. These groups, especially from the oil and gas sectors, have
strong political and economic power, which they use to prevent stricter environmental regulations.
This creates a situation where companies continue to pollute because regulations are weak or do not
go far enough.

The problem of regulatory capture is also key to the market failure. Powerful firms often have the
ability to influence policies in their favor, making it easier for them to pollute without facing the full
costs of their actions. This is known as regulatory capture, where industries shape regulations to
ensure they can continue to produce and pollute at low costs.

As the professor explained, the principle of "polluter pays" is not fully honored. This means that
many companies and countries continue to avoid taking full responsibility for the environmental
damage they cause, leading to increased pollution and social suffering. The environmental impacts,
such as extreme weather events and rising global temperatures, affect everyone, but the economic
benefits of pollution are often concentrated in the hands of the polluters. This leads to inequality,
where a few benefit economically, while the costs are shared by everyone else.

In conclusion, these powerful actors frustrate meaningful climate discussions and actions, preventing
effective solutions to address the causes and impacts of climate change.

Market failure in the context of climate change also stems from incomplete information and
uncertainty. This lack of information creates significant challenges in how markets function,
particularly when it comes to addressing the costs of pollution. For example, carbon trading systems
have faced criticism. While the goal is to limit carbon emissions by allowing companies to trade
carbon credits, this system has been heavily criticized for greenwashing. Developed countries might
buy carbon credits from developing countries to offset their emissions, yet they continue to heavily
pollute, shifting the responsibility to others.

Another example provided by the professor is carbon sequestration programs, where developed
countries finance forest conservation projects in developing countries. Critics argue that this helps
richer nations avoid making real changes while allowing developing countries to bear the
environmental burden, leading to carbon leakage, where carbon emissions are simply transferred
from one region to another.

In addition, powerful lobbyists often participate in international climate negotiations, particularly in

Furthermore, regulatory capture is another critical issue. Firms in industries such as oil and gas often
have significant political and economic power. They influence policy decisions at both national and
international levels to avoid strict environmental controls. This leads to weak environmental
regulations, allowing firms to pollute without facing the full costs of their actions. The result is
suboptimal outcomes, where companies are incentivized to pollute more because of the lack of
stringent oversight.

The professor also highlighted that climate change emerges as a market failure because firms and
nations do not fully take responsibility for the pollution they create. This contradicts the principle of
"polluter pays", where those responsible for pollution should bear the costs. Instead, pollution is
externalized, meaning its negative impacts are passed onto the public, resulting in increased
environmental damage and social suffering.

An example given is how industries, such as oil and gas producers, benefit economically from their
activities, but the negative consequences of pollution are experienced globally. For instance, extreme
weather events linked to rising greenhouse gases affect all societies, yet only a few benefit
economically.

The professor also emphasized that carbon offsetting alone cannot solve the climate crisis. Even
though carbon trading and other market-based solutions are options, they cannot address the full
complexity of the problem. Carbon markets should be seen as supplemental measures that work
alongside other efforts to reduce emissions.

There are many debates around carbon markets, particularly concerning Africa. The professor
proposed a task to examine whether carbon markets can be effective in African countries, where
discussions around introducing carbon markets are becoming more prominent. This will involve
independent reading and a future tutorial discussion to critically examine the potential of carbon
markets in Africa.

In summary, climate change as a market failure occurs when firms and countries avoid the full costs
of pollution, use their influence to block regulations, and shift the burden to others. Addressing this
issue requires a comprehensive examination of market behaviors, regulatory weaknesses, and the
role of powerful actors in preventing effective climate action.