Climate change represents a global negative externality with both environmental and economic dimensions for Turkey. A negative externality occurs when an economic activity imposes costs on third parties that are not reflected in market prices. The use of fossil fuels, carbon-intensive production processes, and energy consumption generate greenhouse gas emissions, which are not fully borne by producers but instead create environmental, economic, and social costs that affect society as a whole. This situation demonstrates that the market mechanism alone is insufficient to address environmental problems. In Turkey, the continued reliance on fossil fuels in energy production, the predominance of road-based transportation, and carbon-intensive industrial activities constitute the main sources of the country’s greenhouse gas emissions. These emissions exacerbate the adverse effects of climate change, leading to increased occurrences of droughts, forest fires, extreme temperatures, and floods. Moreover, indirect costs such as reductions in agricultural productivity, economic losses, and social risks also emerge.

The aim of this study is to examine climate change within the framework of the negative externality concept in economic literature, using Turkey as a case study. The study highlights that the free market mechanism alone is inadequate to resolve climate change and underscores the necessity of effective public policies, regulations, and international cooperation. Consequently, it aims to provide a foundation for policy recommendations that support both environmental sustainability and economic stability.