August 1, 2002
Center for Business and Government, John F. Kennedy School of Government
The purpose of this paper is to assess the Kyoto Protocol and the alternative policy architectures that have been proposed in regard to their respective abilities to induce participation and compliance. This paper compares these various policy proposals and discusses their relative merits in terms of these major criteria. The authors find that those proposals that are best in terms of cost-effectiveness (conditional on implementation) -- primarily market-based instruments, such as tradeable permit regimes -- are less likely to be effective in promoting compliance and participation. Other proposals -- such as various kinds of domestic "policies and measures" -- appear better at promoting compliance and participation, but are less likely to be cost-effective. None of the alternatives fully meets the challenge of offering a cost-effective international regime that will enjoy a reasonably high level of implementation by sovereign states. Both criteria are important: cost-effectiveness conditional on implementation and probability of international implementation. Up to now, the economic literature and actual negotiations have emphasized the criterion of cost-effectiveness. The authors argue that these issues need rather to be addressed up front and alongside concerns for cost-effectiveness. Part 2 describes the fundamental characteristics of the Framework Convention on Climate Change, the Kyoto Protocol, and 13 proposed alternative policy architectures. In Part 3, the authors consider available methods of increasing participation and compliance, and examine the implications for the Kyoto Protocol and for the proposed alternative policy frameworks. Part 4 summarizes the main conclusions.
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