Comments on: Trade & the environment http://www.harryrclarke.com/2009/11/09/trade-the-environment/ On economics, politics & other things Tue, 07 Feb 2012 11:34:25 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: hc http://www.harryrclarke.com/2009/11/09/trade-the-environment/comment-page-1/#comment-9830 hc Tue, 10 Nov 2009 11:53:17 +0000 http://www.harryrclarke.com/?p=2473#comment-9830 These are interesting points some of which I had not picked up on. Canada seems to be one of the few beneficiaries of climate change. BTAs directed at it would need to be imnplausibly huge. Moral suasion arguments might work better here along with the reminder that 3oC plus warming won't help anyone. The Saudis of course face huge costs if the world sees their fuel as a public bad. They will cop the full effect of carbon pricing and good riddance. Yes the Nash equilibrium will involve some effort but if global costs are ignored effort will be undersupplied. Countries might engage in a high degree of effort if there are moral suasion effects, if they fear a global disaster or if there are strong local pollution advantages. These are interesting points some of which I had not picked up on.

Canada seems to be one of the few beneficiaries of climate change. BTAs directed at it would need to be imnplausibly huge. Moral suasion arguments might work better here along with the reminder that 3oC plus warming won’t help anyone. The Saudis of course face huge costs if the world sees their fuel as a public bad. They will cop the full effect of carbon pricing and good riddance.

Yes the Nash equilibrium will involve some effort but if global costs are ignored effort will be undersupplied. Countries might engage in a high degree of effort if there are moral suasion effects, if they fear a global disaster or if there are strong local pollution advantages.

]]> By: Peter Wood http://www.harryrclarke.com/2009/11/09/trade-the-environment/comment-page-1/#comment-9827 Peter Wood Tue, 10 Nov 2009 11:36:34 +0000 http://www.harryrclarke.com/?p=2473#comment-9827 Nice summary. While under a Kyoto-style regime most non-mitigators will be developing countries, that may no longer be so true under a post-2012 framework. Two countries that are not being very constructive in the present negotiations are Canada and Saudi Arabia. Canada could also not comply with its Kyoto commitments and hasn't committed to much after 2012. Saudi Arabia, although not an Annex I country, does have quite a bit of wealth, and wants compensation for reduced oil revenue. Maybe they would be willing to join an agreement which didn't give them what they want if they were subject to border tax adjustments or other trade measures. The three reasons why countries would engage in unilateral measures seem to be reasons why the Nash equilibrium will involve some mitigation. But the problem is the Nash amount of mitigation is could be significantly less than socially optimal. Do you think that there are reasons why countries will engage in more mitigation than the Nash equilibrium? Nice summary. While under a Kyoto-style regime most non-mitigators will be developing countries, that may no longer be so true under a post-2012 framework. Two countries that are not being very constructive in the present negotiations are Canada and Saudi Arabia. Canada could also not comply with its Kyoto commitments and hasn’t committed to much after 2012. Saudi Arabia, although not an Annex I country, does have quite a bit of wealth, and wants compensation for reduced oil revenue. Maybe they would be willing to join an agreement which didn’t give them what they want if they were subject to border tax adjustments or other trade measures.

The three reasons why countries would engage in unilateral measures seem to be reasons why the Nash equilibrium will involve some mitigation. But the problem is the Nash amount of mitigation is could be significantly less than socially optimal. Do you think that there are reasons why countries will engage in more mitigation than the Nash equilibrium?

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