Article: Designing Climate Mitigation Policy by Joseph E. Aldy Alan J. Krupnick

Question

Article: Designing Climate Mitigation Policy by Joseph E. Aldy Alan J. Krupnick Richard G. Newell Ian W.H. Parry William A. Pizer

Question.

I. Why do the author’s believe that climate change is an ”enormously complex problem?”

A. What horizons do they want to study policy for in terms of ”GHG” control? What two approaches exist to this question?

B. What is meant by the cost effective approach? What issues do people tend to study using this approach?

C. What is meant by the ”cost-benefit approach?” What highly contentious issues does this approach introduce?

D. What issues in administration come up regardless of the choice of approach?

Explanation / Answer

I) The authors believe that climate change is an "enormously complex problem" because climate change, does not contain a few distinct, but various inter-connected parts to consider at the same time, among which one has to incorporate many aspects of the social, economic, scientific, policy oriented and international relations, when making a rational policy response for the problem, which is difficult and sometimes quite conflicting.

A) They want assessment of a globally efficient time path, ie. estimation according to time, taking it as a variable, of either pricing or controling the greenhouse gas (GHG) emissions. They also want to include how much action, as the broadest issue, to price or control GHGs is justified in the near and longer term at a global level. Two distinct approaches to this question are the cost effectiveness approach and cost-benefit approach.

B) Cost-effective approach studies the question of what policy path might achieve alternative goals at a minimum economic cost thereby assessing for practical constraints. It also recognise that policymakers usually having some ultimate target for containment of the amount of forecasted climate change or atmospheric GHG accumulations.

C) Cost-benefit approach weigh the benefits and costs of smoothing out the intensity of climate change. The highly contentious issues it introduces are damage valuation, dealing with extreme climate risks, and intergenerational discounting.

D) Regardless of the choice of approach, issues comes up in the implementation of climate policy. At a domestic level, it includes a comparitive evaluation of alternative emissions control instruments and how they could be structured to promote administrative ease as well as minimize efficiency costs, incorporating other policy distortions, abatement cost uncertainty, and possible distributional constraints.

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