Climate Change, Smart Contracts, and Blockchain – Case Study – Economics Assignment Help

Assignment Task

Introduction to the Case Study
Burning of fossil fuels is the dominant contributor to global warming.
1 Primarily, fossil fuels
(coal, oil, and natural gas) are burned in power plants to produce electricity. This process releases carbon dioxide into the atmosphere. Carbon dioxide, which is a greenhouse gas, accelerates climate change (warms the planet) by trapping the heat from the sun.2 The resulting ‘extreme weather events’ (droughts, floods, storms, cyclones, and fires) create substantial losses in economic value by destroying the productive capacity of the global economy.3 The losses are compounded, as climate change, accelerates degradation of agricultural land; hence, threatening global food supply.4
When considering the human response to climate change, the following two points are important to note:
• Due to growing public awareness, the demand for electricity that has been generated in a clean way (without emitting greenhouse gases), such as solar power, has been rising. However, this demand does not translate into meaningful action as consumers cannot easily change who their power-producer is. If power is supplied in an area by a power-plant sitting at the center of the grid, and that power-plant burns fossil fuels to generate electricity, then what can a consumer do? It seems that, short of generating her own power via solar cells (which most people cannot afford to do anyway), there really are no good options available to such an environmentallyconscious consumer. 

Case Study Questions

Q1) By using a clearly-labelled demand-supply diagram, illustrate the negative externality associated with electricity generation by burning fossil fuels. Provide a clear explanation. (No additional reading is required. Consult the learning materials available on BlackBoard).

Q2) In an AD-AS (aggregate-demand and aggregate-supply) framework, show the effect of climate change in the long-run by drawing a clearly-labelled diagram. Provide a clear explanation. (No additional reading required. Consult the learning materials available on BlackBoard).