The Role of Economics in Climate Change Policy
Open Access
- 1 May 2002
- journal article
- Published by American Economic Association in Journal of Economic Perspectives
- Vol. 16 (2), 107-129
- https://doi.org/10.1257/0895330027283
Abstract
The most important characteristic of climate change as a policy problem is uncertainty. From climatology to economics, uncertainties are pervasive, large and difficult to resolve. However, the economic theory of environmental policy under uncertainty provides a clear guide to the design of an appropriate policy. An efficient and practical approach would be a hybrid that incorporates the best features of tradable permits and emissions taxes. Unfortunately, international negotiations have taken a different approach, focusing on rigid targets and timetables for emissions reductions. The result has been the Kyoto Protocol, an agreement with no real chance of reducing greenhouse gas emissions.Keywords
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