2002 World Congress of Environmental and Resource Economists

The Kyoto Protocol on climate change allocates tradable quotas to developed countries, but let them free to choose the means to respect their quota. There are good reasons for a country not to generalise internationally tradable permits. We thus compare a tax and purely domestic tradable permits, for the European Union, Japan and the U.S. Information on abatement costs and international permit price is imperfect and stems from nine global models. Permits perform better than a tax for Japan and the U.S., whereas both instruments yield a similar outcome for Europe. Applying Weitzman (1974)'s framework in this new context, it has been shown that these results are due to the positive correlation between costs and benefits: models that predict a low abatement cost in one country generally do so in others too, thereby forecasting a low international permit price.



	Paper Title:	Complying With The Kyoto Protocol Under Uncertainty: Taxes Or Tradable Permits?
	Presenting Author:	Philippe Quirion (CIRED)
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	Coauthor 2:
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	Abstract:	The Kyoto Protocol on climate change allocates tradable quotas to developed countries, but let them free to choose the means to respect their quota. There are good reasons for a country not to generalise internationally tradable permits. We thus compare a tax and purely domestic tradable permits, for the European Union, Japan and the U.S. Information on abatement costs and international permit price is imperfect and stems from nine global models. Permits perform better than a tax for Japan and the U.S., whereas both instruments yield a similar outcome for Europe. Applying Weitzman (1974)'s framework in this new context, it has been shown that these results are due to the positive correlation between costs and benefits: models that predict a low abatement cost in one country generally do so in others too, thereby forecasting a low international permit price.
	Link to paper:	http://weber.ucsd.edu/~carsonvs/papers/266.PDF

	Session / Day / Time	1A / Monday / 8:00 - 10:00 am

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