The Economics of a Lost Deal

Frédéric Ghersi and Jean-Charles Hourcade

RFF Working Paper Series from Resources for the Future

Abstract: This paper examines compromise spaces between competing perspectives on four key climate change issues: costs, level of domestic action, environmental integrity, and developing world involvement. Based on extensive simulations of a model integration tool, SAP12 (Stochastic Assessment of Climate Policies, 12 models), the analysis considers options for fine-tuning the Kyoto Protocol, such as concrete ceilings or levies on carbon imports; restoration payments to be made on excess emissions; credits for sequestration activities in Annex B countries; and others. It shows the critical importance of the baseline against which the performance of each tool has to be assessed in the absence of direct economic penalties for noncompliance. The restoration payment option (also known as a safety valve) emerges as a superior means of addressing the core policy issues, including environmental integrity, and provides a large compromise space between payments of $35 to $100 per ton of carbon.

Keywords: limate negotiations; 2010 carbon markets; uncertainty about abatement costs (search for similar items in EconPapers)
JEL-codes: D74 D78 D80 Q25 (search for similar items in EconPapers)
Date: 2001-12-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-sea
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Citations: View citations in EconPapers (20)

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Working Paper: The Economics of a Lost Deal (2001)
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