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The Economics of a Lost Deal

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Author Info

  • Ghersi, Frederic
  • Hourcade, Jean-Charles

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.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-01-48-.

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Date of creation: 01 Dec 2001
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Handle: RePEc:rff:dpaper:dp-01-48-

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Related research

Keywords: limate negotiations; 2010 carbon markets; uncertainty about abatement costs;

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References

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  1. Franck Lecocq & Jean-Charles Hourcade & Minh Ha-Duong, 1998. "Decision making under uncertainty and inertia constraints: sectoral implications of the when flexibility," Post-Print halshs-00002458, HAL.
  2. Minh Ha-Duong & Jean-Charles Hourcade & Franck Lecocq, 1999. "Dynamic consistency problems behind the Kyoto protocol," Post-Print halshs-00002459, HAL.
  3. Minh Ha-Duong & Michael Grubb & Jean-Charles Hourcade, 1997. "Influence of socioeconomic inertia and uncertainty on optimal CO2-emission abatement," Post-Print halshs-00002452, HAL.
  4. Warwick J. McKibbin & Robert Shackleton & Peter J. Wilcoxen, 1998. "The Potential Effects of International Carbon Emissions Permit Trading Under the Kyoto Protocol," Economics and Environment Network Working Papers 9805, Australian National University, Economics and Environment Network.
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Citations

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Cited by:
  1. VAN STEENBERGHE, Vincent, 2003. "CO2 abatement costs and permits price : Exploring the impact of banking and the role of future commitments," CORE Discussion Papers 2003098, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Jean Charles Hourcade & P.-R. Shukla & Sandrine Mathy, 2005. "Cutting the Climate-Development Gordian Knot - Economic options in a politically constrained world," CIRED Working Papers hal-00866572, HAL.
  3. Khalil Helioui, 2006. "Coordination internationale des politiques climatiques : quelle efficacité ?," CIRED Working Papers hal-00866433, HAL.
  4. Lecuyer, Oskar & Quirion, Philippe, 2013. "Can uncertainty justify overlapping policy instruments to mitigate emissions?," Ecological Economics, Elsevier, vol. 93(C), pages 177-191.
  5. Yasuko Kameyama, 2004. "The Future Climate Regime: A Regional Comparison of Proposals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 4(4), pages 307-326, December.
  6. Jean Charles Hourcade & P.-R. Shukla & Sandrine Mathy, 2005. "Cutting the Climate-Development Gordian Knot - Economic options in a politically constrained world," Working Papers hal-00866572, HAL.
  7. Jean Charles Hourcade & Franck Lecocq, 2003. "Equitable Provision of Long-Term Public GoodsThe role of Negotiation Mandates," CIRED Working Papers halshs-00000968, HAL.
  8. Jean Charles Hourcade & Baptiste Perrissin-Fabert & Julie Rozenberg, 2011. "Venturing into Uncharted Financial Waters : an Essay on Climate-Friendly Finance," CIRED Working Papers hal-00866434, HAL.
  9. Jean-Charles Hourcade, 2002. "Dans le labyrinthe de verre. La négociation sur l'effet de serre," Post-Print halshs-00007691, HAL.
  10. Oskar Lecuyer & Philippe Quirion, 2012. "Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions ?," Working Papers hal-00866440, HAL.
  11. Jean Charles Hourcade & Frédéric Ghersi & Patrick Criqui, 2003. "Viable Responses to the equity-responsability dilemna : a consequentialist view," CIRED Working Papers halshs-00000965, HAL.
  12. Franck Lecocq & Jean-Charles Hourcade, 2012. "Unspoken ethical issues in the climate affair: Insights from a theoretical analysis of negotiation mandates," Economic Theory, Springer, vol. 49(2), pages 445-471, February.
  13. Khalil Helioui, 2006. "Coordination internationale des politiques climatiques : quelle efficacité ?," Working Papers hal-00866433, HAL.

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