It is generally believed that the reduction of net emissions of carbon dioxide will be achieved more efficiently with tradable carbon credits than without. The subject is treated at length in Freestone (2009) and will not be explored here. The argument is that those organisations that can reduce carbon dioxide emissions or provide carbon sinks more economically than others will sell these benefits to others at a lower cost than the second party could produce the benefit themselves. This is a classic free-market argument.

This is supported by conventional economic discussion. However, the externalities are often neglected or ‘wrongly’ valued, and many socially undesirable consequences come from applying simple free-market concepts. Engineers in the future will take more account of externalities.

Just as there are climate models that, with the aid of many assumptions, predict the change in the global climate, there are global economic models that try and predict the change in indices such as GDP. The assumptions underlying these models are as uncertain as, or even more uncertain than, in physical models of the atmosphere. We would particularly like to identify the fact that assumptions must be made about social behaviour in the future. Predicting the reaction of people in the future must be considered most challenging, especially when one notes the social changes in large countries such as Russia that have occurred over the last few years.