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

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  • Larson, Donald F.
  • Parks, Paul

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.

Suggested Citation

  • Larson, Donald F. & Parks, Paul, 1999. "Risks, lessons learned, and secondary markets for greenhouse gas reductions," Policy Research Working Paper Series 2090, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2090
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    References listed on IDEAS

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    Cited by:

    1. Robert Oleschak & Urs Springer, 2007. "Measuring host country risk in CDM and JI projects: a composite indicator," Climate Policy, Taylor & Francis Journals, vol. 7(6), pages 470-487, November.
    2. Larson, Donald F., 2013. "Blue water and the consequences of alternative food security policies in the Middle East and North Africa for water security," Policy Research Working Paper Series 6464, The World Bank.

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