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Additional resources for Argument in the Greenhouse: The International Economics of Controlling Global Warming

Sample text

To meet the targets. This gives governments more flexibility to deal with market failures and to balance their conflicting policy goals. MACROECONOMIC COSTS OF CARBON ABATEMENT The superior efficiency of permits compared to non-harmonised taxes is a partial equilibrium result, which only takes into account the direct costs of emission abatement. In an efficient scheme, if the stabilisation target is set correctly, there should be a direct increase in global consumer welfare from introducing CO2 abatement measures.

This group of twenty-four countries produces approximately 43 per cent of global fossil fuel derived carbon emissions and of this 88 per cent is produced by the countries of the G7: USA, Japan, Germany, France, Italy, UK, and Canada (WRI 1990). d). Already the secretariat is considering draft amendments, or protocols, to the convention which will affect the conditions of enforcement and the strength of commitment of the parties (for example, the Draft Protocol of AOSIS 1994). However, the passage from a framework convention to a ‘hard’ treaty which has environmentally significant targets and objectives is likely to be a long one, and enforcement will be based International co-ordination of climate change prevention 19 more on consensus than on legal obligation (Greene 1993).

Anybody who has delved into the complexities of multi-player, repeated game theory will know that the assumptions about information, commitment and opportunities for action—which essentially define the political process—are critical for determining long run economic equilibria. Therefore, unlike other studies of global warming economics, we are not concerned with finding the ‘optimal’ level of climate change, or trying to predict how very long run changes in energy markets can reduce CO2 emissions; many such studies have already been done and the latter topic seems to be better suited to technological assessment, rather than empirical economic modelling.

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