Natural Resources and Environment, Vol. 21, Winter 2007
2 Pages Posted: 16 Nov 2012
Date Written: 2007
Economics is the fundamental motivation for opposition to U.S. participation in the Kyoto Protocol and to adopting mandatory limitations on greenhouse gas emissions. Quite simply, the prospect of the United States reducing its greenhouse gas emissions to 7 percent below its 1990 emission levels has been viewed as just too expensive, with some economists predicting costs of Kyoto compliance to be more than $300 billion. Many Americans do not believe that greenhouse gas reductions can be achieved without, at the least, significant hardship and reduced economic competitiveness with developing nations. To make matters worse, the Kyoto reductions would have only a small impact on the world's global warming trajectory.
Within the United States many perceive these challenges as utterly impossible without destroying our economy. However, the underlying assumption about the cost of reducing greenhouse gas emissions is fundamentally wrong. Most economic models predicting future compliance costs are wrong, and they will always be wrong. The problem with most economic predictions of future compliance costs is that economists do not really trust that this time the market will again innovate and be competitive; the models are flawed because of lack of trust in the marketplace to invent solutions not imagined (because there was no need to imagine) before the mandate was in place.
Keywords: environmental law, climate change, greenhouse gas emissions, economics
JEL Classification: K32
Suggested Citation: Suggested Citation
Hodas, David, Imagining the Unimaginable: Reducing Greenhouse Gas Emissions (2007). Natural Resources and Environment, Vol. 21, Winter 2007. Available at SSRN: https://ssrn.com/abstract=2147999