Conclusion
The greenhouse effect is real and is likely to have a huge impact on the environment and economic systems in the years to come. Because there are losses and gains associated with global warming, policies must reflect that. As Nordhaus puts, ‘[the] goal of economic research is to examine policies that will find the right balance, on the margin, of costs of action to slow climate change and the benefits of reducing future damages from climate change’ (Nordhaus, 2005).This goal cannot be obtained if the marginal benefit function is not accurately portraying the value of emitting greenhouse gasses and the changes in the environment.