Climate ChangeEnvironment

Want To Address Climate Change? Look To Business, Not Government

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The original version of this post was written by Todd Henderson, for Forbes.com 

Instead of waiting for the government to compel carbon emitters to reduce their output, individuals worried about climate change should simply demand that the emitters do so directly. Buy an electric car, install solar panels, shop only for goods made in a carbon-neutral manner, and stop flying around so much. And then go further. Work at company committed to no environmental impact; donate your money to NGOs dedicated to addressing climate change.

While these may seem small individually, collectively consumers, investors, and workers are responsible for our entire share of global emissions. It would be easier for government to simply command us to all be better, but since government action relies on coercion, uses a one-size-fits-all approach, and can have large negative effects when it gets things wrong, it is designed to be costly to mobilize.

The broader point is that when it comes to doing good, we are not limited to acting collectively through government. Government is one way in which we produce so-called public goods, like a clean environment. But businesses and non-profit organizations can create these too. In fact, these three types of actors compete with each other in what my University of Chicago Law School colleague Anup Malani and I have called the “market for altruism.”

Everyone wants to help others, but to have an impact on the world, we have to act together and at scale. Government, business, and NGOs enable us to do this. We can give them money, volunteer our time to them, work for them at a discount, invest in them, or buy goods and services from these providers. Each of these is a way of acting altruistically. Each of these is a way of helping our fellow man.

Consider a simple example—you want to help poor farmers in Ethiopia. You could: pay taxes to the government, who could then give foreign aid to the Ethiopian government, which you would then hope got the money or help to the farmer; alternatively, you could donate money to or work for an NGO that helps Ethiopian farmers; or, you could buy products from companies that are committed to helping Ethiopian farmers. You should do the one (or more) of these, depending on which you think is the most efficient at doing good.

Viewed in this way, buying “fair trade” coffee is simply buying a bundle of regular coffee and a donation to help the poor Ethiopian farmers. If you want to save the climate instead, buy products with carbon offsets bundled instead.

Tomiwa Isiaka
Tomiwa Isiaka is in her head a lot, so she writes, because that's what you do when you're in your head a lot.. She likes the sun, and that's what all this is about, environmental sustainability to keep the sun alive