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Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World

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  • Gilbert E. Metcalf
  • David Weisbach

Abstract

In this article we discuss the mechanics of linking different types of climate change policies and identify areas where linkage will be difficult. Our goal is to identify opportunities for constructive linkage and policy choices that may limit or hinder linkage. We argue that the basic approach underlying emission reduction credit systems like the Kyoto Clean Development Mechanism (CDM) and Joint Implementation can be extended to create linkage opportunities in diverse emission control systems in ways that do not necessarily suffer from the shortfalls of the current CDM. Moreover, although emission reduction credit systems are designed to work with market-based systems like cap and trade, we describe ways in which they can also interact with tax systems as well as certain regulatory systems. Copyright 2012, Oxford University Press.

Suggested Citation

  • Gilbert E. Metcalf & David Weisbach, 2012. "Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 110-129.
    • Handle: RePEc:oup:renvpo:v:6:y:2012:i:1:p:110-129
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    Cited by:

    1. Bodansky, Daniel M. & Hoedl, Seth A. & Metcalf, Gilbert E. & Stavins, Robert N., "undated". "Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement," Climate Change and Sustainable Development 202114, Fondazione Eni Enrico Mattei (FEEM).
    2. Itkonen, Juha, 2017. "Efficiency and dependency in a network of linked permit markets," Research Discussion Papers 20/2017, Bank of Finland.
    3. Matthew Ranson & Robert N. Stavins, 2025. "Linkage of Greenhouse Gas Emissions Trading Systems: Learning from Experience," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 21, pages 557-579, World Scientific Publishing Co. Pte. Ltd..
    4. Richard S.J. Tol, 2017. "Leaving an emissions trading scheme – insights from the United Kingdom," Working Paper Series 1017, Department of Economics, University of Sussex Business School.
    5. Sheila M. Olmstead & Robert N. Stavins, 2025. "Three Key Elements of Post-2012 International Climate Policy Architecture," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 18, pages 483-508, World Scientific Publishing Co. Pte. Ltd..
    6. Burtraw, Dallas & Palmer, Karen & Munnings, Clayton & Weber, Paige & Woerman, Matt, 2013. "Linking by Degrees: Incremental Alignment of Cap-and-Trade Markets," RFF Working Paper Series dp-13-04, Resources for the Future.
    7. Diniz Oliveira, Thais & Costa Gurgel, Angelo & Tonry, Steve, 2021. "Potential trading partners of a brazilian emissions trading scheme: The effects of linking with a developed region (Europe) and two developing regions (Latin America and China)," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    8. Michael A. Mehling & Gilbert E. Metcalf & Robert N. Stavins, 2025. "Linking Heterogeneous Climate Policies (Consistent with the Paris Agreement)," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 24, pages 613-676, World Scientific Publishing Co. Pte. Ltd..
    9. Stavins, Robert N., 2019. "The Future of U.S. Carbon-Pricing Policy: Normative Assessment and Positive Prognosis," Working Paper Series rwp19-017, Harvard University, John F. Kennedy School of Government.
    10. Jon Strand, 2024. "Prospects for Markets for Internationally Transferred Mitigation Outcomes under the Paris Agreement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(10), pages 2683-2716, October.
    11. Aldy, Joseph Edgar, 2015. "Evaluating Mitigation Effort: Tools and Institutions for Assessing Nationally Determined Contributions," Scholarly Articles 23936083, Harvard Kennedy School of Government.
    12. Diniz Oliveira, Thais & Gurgel, Angelo & Tonry, Steve, 2018. "The Effects for Brazil of Linking Emissions Trading Schemes in the context of the Heterogeneity of Trading Partners," Conference papers 332951, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Diniz Oliveira, Thais & Costa Gurgel, Angelo & Tonry, Steve, 2019. "International market mechanisms under the Paris Agreement: A cooperation between Brazil and Europe," Energy Policy, Elsevier, vol. 129(C), pages 397-409.
    14. Richard S J Tol, 2018. "Policy Brief—Leaving an Emissions Trading Scheme: Implications for the United Kingdom and the European Union," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 183-189.
    15. Chao Qi & Yongrok Choi, 2019. "A Study of the Feasibility of International ETS Cooperation between Shanghai and Korea from Environmental Efficiency and CO 2 Marginal Abatement Cost Perspectives," Sustainability, MDPI, vol. 11(16), pages 1-16, August.
    16. Bernard Caillaud & Gabrielle Demange, 2017. "Joint Design of Emission Tax and Trading Systems," Annals of Economics and Statistics, GENES, issue 127, pages 163-201.
    17. Bosello, Francesco & Parrado, Ramiro, "undated". "Climate Change Impacts and Market Driven Adaptation: the Costs of Inaction Including Market Rigidities," Climate Change and Sustainable Development 183634, Fondazione Eni Enrico Mattei (FEEM).
    18. Valentina Bosetti & Jeffrey Frankel, 2012. "Politically Feasible Emissions Targets to Attain 460 ppm CO 2 Concentrations," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 86-109.
    19. Stavins, Robert, 2019. "The Future of United States Carbon-Pricing Policy," RFF Working Paper Series 19-11, Resources for the Future.
    20. Woerman, Matt, 2023. "Linking carbon markets with different initial conditions," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    21. Robert N. Stavins, 2025. "The Future of US Carbon-Pricing Policy," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 11, pages 299-365, World Scientific Publishing Co. Pte. Ltd..
    22. Doda, Baran & Quemin, Simon & Taschini, Luca, 2019. "Linking permit markets multilaterally," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    23. Simon Quemin & Christian Perthuis, 2019. "Transitional Restricted Linkage Between Emissions Trading Schemes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 1-32, September.
    24. Itkonen, Juha, 2017. "Efficiency and dependency in a network of linked permit markets," Bank of Finland Research Discussion Papers 20/2017, Bank of Finland.
    25. Tracy Snoddon, 2016. "Carbon Copies: The Prospects for an Economy-wide Carbon Price in Canada," e-briefs 247, C.D. Howe Institute.

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