The Economics of a Lost Deal
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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- Lecocq, Franck & Hourcade, Jean-Charles & Ha Duong, Minh, 1998.
"Decision making under uncertainty and inertia constraints: sectoral implications of the when flexibility,"
Elsevier, vol. 20(5-6), pages 539-555, December.
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- Sandrine Mathy & Jean Charles Hourcade & Christophe De Gouvello, 2001.
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- S. Mathy & Jean Charles Hourcade & C. De Gouvello, 2001. "Clean development mechanism: Leverage for development?," Post-Print hal-00719267, HAL.
- 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.
- Minh Ha-Duong & Jean Charles Hourcade & Franck Lecocq, 1999. "Dynamic consistency problems behind the Kyoto protocol," Post-Print halshs-00002459, HAL.
- 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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