Journal of Economic Perspectives: Vol. 16 No. 2 (Spring 2002)


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The Role of Economics in Climate Change Policy

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McKibbin, Warwick J., and Peter J. Wilcoxen. 2002. "The Role of Economics in Climate Change Policy." Journal of Economic Perspectives, 16(2): 107-129.

DOI: 10.1257/0895330027283


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.

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McKibbin, Warwick J. (Research School of Pacific and Asian Studies, Australia National University, Canberra, Australia and Brookings Institution, Washington, D.C.,)
Wilcoxen, Peter J. (University of Texas, Austin, Texas and Brookings Institution, Washington, D.C., USA)


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