2002 World Congress of Environmental and Resource Economists

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. It focuses on the policy issues stemming from the uncertainty about abatement costs. 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. It demonstrates that the restoration payment (also known as a safety valve) emerges as a superior means of addressing the cost uncertainty issue, and, on pure economic considerations, provided a large compromise space at COP6 for payments of $35 to $100 per ton of carbon. Examining the Marrakech accord, it derives some lessons for attempts at completing Kyoto's unfinished business or at moving on to a new framework.



	Paper Title:	The Economics Of A Lost Deal
	Presenting Author:	Jean-Charles Hourcade (CIRED)
	Coauthor 1:	Frédéric Ghersi
	Coauthor 2:
	Coauthor 3:
	Abstract:	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. It focuses on the policy issues stemming from the uncertainty about abatement costs. 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. It demonstrates that the restoration payment (also known as a safety valve) emerges as a superior means of addressing the cost uncertainty issue, and, on pure economic considerations, provided a large compromise space at COP6 for payments of $35 to $100 per ton of carbon. Examining the Marrakech accord, it derives some lessons for attempts at completing Kyoto's unfinished business or at moving on to a new framework.
	Link to paper:	Not available

	Session / Day / Time	2A / Monday / 10:15 - 11:45 am

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