Risks, lessons learned, and secondary markets for greenhouse gas reductions

Donald Larson () and Paul Parks

No 2090, Policy Research Working Paper Series from The World Bank

Abstract: Collectively or individually, countries are likely to implement policies designed to limit greenhouse gas emissions. Experience from tradable quota schemes suggests that emissions trading could significantly reduce the costs of emission limits. The Kyoto Protocol provides the framework for a common trading mechanism for all countries - including countries that would not face immediate emission limits. Significantly, the Protocol places the responsibility for meeting emission limits with national governments. How policymakers choose to implement emission limits will significantly shape the incentives that drive evolving secondary markets for greenhouse-gas-based instruments. Potential market participants who were surveyed rate policy-related risk as higher than business-related risks. Domestic polices designed to reduce fragmentation in secondary markets, establish clear baselines and procedures, and strengthen host-country institutions can all help reduce the risks and costs of emission limits.

Keywords: Economic Theory&Research; Labor Policies; Payment Systems&Infrastructure; Environmental Economics&Policies; Health Economics&Finance; Health Economics&Finance; Environmental Economics&Policies; Carbon Policy and Trading; Energy and Environment; Economic Theory&Research (search for similar items in EconPapers)
Date: 1999-03-31
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Citations: View citations in EconPapers (2)

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