This academic paper targets the intergenerational risk sharing dilemma of the current international policy effort to establish conditions of global cooperation for a global carbon price which could, with an adequate carbon-pricing framework, reduce and share cost of mitigation in an efficient, effective and equitable way helping to decouple growth from greenhouse gas emissions.
Table of Contents
1. Introduction: „The greatest example of market failure“
2. Carbon Pricing and Emissions Markets in Practice
3. Framework for Understanding International Collective Action for Climate Change
3.1 Understanding International Collective Action
3.2 Existing Intern. Arrangements for Global Cooperation on Climate Change
3.3 Building and Sustaining Coordinated Global Action on Climate Change
4. Creating a Global Price for Carbon
4.1 Reducing the Costs of Mitigation through Framework Efficiency
4.2 Sharing the Costs of Mitigation
4.3 The Experience of the Kyoto Protocol
4.4 Building on and Expanding the Kyoto Protocol Framework
4.5 Interaction with the International Trade Regime
5. Conclusion: Equitable Intergenerational Risk Sharing
Research Objectives and Core Themes
This paper examines the intergenerational risk-sharing dilemma within international climate policy, specifically focusing on the necessity of establishing a global carbon-pricing framework to achieve efficient, effective, and equitable mitigation of greenhouse gas emissions.
- The evaluation of international collective action frameworks and game theory applications.
- The mechanics and effectiveness of carbon markets and emission trading schemes (ETS).
- The role of the Kyoto Protocol as a foundation for future global climate cooperation.
- Criteria for sustainable and transparent international climate policy institutions.
- The integration of national, regional, and sectoral carbon markets into a unified global strategy.
Excerpt from the Publication
1. Introduction: „The greatest example of market failure“
Human-induced climate change is caused by the emissions of carbon dioxide and other GHGs that have accumulated in the atmosphere mainly over the past 100 years. Those who create these negative externalities by generating electricity, powering their factories, flare off gases, cut down forests, fly in planes, heat their homes or drive their cars do not have to pay for the cost of the climate change because these costs are not reflected in market prices. Free-riding incentives are in the nature of public goods like global climate and illustrate exemplary the weakness of markets to clear at equilibrium prices.
Scientific evidences illustrate that impacts of climate change are persistent and develop over the long run. There are uncertainties that prevent precise quantification of the economic impact and there is a serious risk of major irreversible change with non-marginal economic effects on global economical and social welfare. Global welfare at risk can be substantially reduced if GHG concentration in the atmosphere can be stabilized between 450-550 ppm CO2e. Economics of stabilization at this level would require an emission reduction in developed and developing countries, where developed countries take responsibility for cuts to 60% of their 1990 emissions by 2050.
Summary of Chapters
1. Introduction: „The greatest example of market failure“: Defines climate change as a critical economic market failure and sets the scope for exploring global carbon pricing as a mitigation strategy.
2. Carbon Pricing and Emissions Markets in Practice: Analyzes the implementation of cap-and-trade systems and emission taxes, emphasizing the need for framework confidence (credibility, flexibility, predictability).
3. Framework for Understanding International Collective Action for Climate Change: Investigates the theoretical basis for international cooperation, utilizing game theory and institutional analysis to address the "tragedy of the commons."
4. Creating a Global Price for Carbon: Explores strategies for mitigating costs through framework efficiency, equitable cost-sharing, and the potential for expanding the Kyoto Protocol and market-based mechanisms.
5. Conclusion: Equitable Intergenerational Risk Sharing: Summarizes the necessary criteria for a successful global climate regime and highlights the urgent need to move beyond political procrastination to secure future growth.
Keywords
Carbon Markets, Carbon Pricing, Emission Trading, Externality, Flexible Mechanism, Framework, Free-riding, Game Theory, Intergenerational Risk Sharing, Market Failure, Moral Hazard, Kyoto Protocol, Price Signals, Public good.
Frequently Asked Questions
What is the primary focus of this paper?
The paper focuses on the conditions required for global cooperation regarding carbon pricing, emphasizing the efficiency and equity of market-based solutions to climate change.
What are the central themes discussed?
Central themes include the economic nature of market failure, the role of international policy frameworks, the mechanics of emission trading schemes, and the challenges of achieving global collective action.
What is the ultimate goal of the research?
The goal is to analyze how an adequate carbon-pricing framework can reduce and share the costs of mitigation while decoupling economic growth from greenhouse gas emissions.
Which scientific methodology is primarily applied?
The work employs a synthesis of economic theory, specifically game theory and mechanism design, to evaluate institutional arrangements and market incentives for climate change mitigation.
What does the main body of the work cover?
It covers the practical application of carbon markets, the theoretical framework for international cooperation, existing arrangements like the Kyoto Protocol, and strategies for expanding these frameworks.
Which keywords best characterize the paper?
Key terms include Carbon Markets, Market Failure, Kyoto Protocol, Intergenerational Risk Sharing, and Flexible Mechanism.
How does the author define the "rationality trap"?
The author describes it as the contradiction between individual rationality and collective rationality, where short-term selfish interests hinder long-term group benefits in the context of public goods.
What is the significance of the "framework confidence" drivers?
Credibility, flexibility, and predictability are identified as essential drivers that reduce uncertainty for investors, thereby enabling firms to commit to low-carbon investment trajectories.
- Quote paper
- M.Sc Josué Manuel Quintana Díaz (Author), 2010, Conditions for Global Cooperation - Carbon Pricing, Munich, GRIN Verlag, https://www.grin.com/document/152844
