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Economics of climate policy and collective decision making

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Abstract

This paper explores the reasons why economic instruments of climate change are reluctantly applied and stresses the need for interdisciplinary research linking economic theory and empirical testing to deliberative political procedures. It is divided in three parts. The first one recalls the main issues in implementing Cost-Benefit Analysis such as information problems, uncertainties, discounting the future and irreversibilities. The second part shows how these issues can be treated in integrated assessment and techno-economic models and presents a case study, which shows that

  • The chosen scenario tends to stabilize atmospheric CO2 concentration at around 550 ppm in the long run.

  • Exclusion of possibility to trade CO2 emission permits under a cap regime would increase the cost of emission abatement for OECD countries.

  • Combining different flexibility instruments might lead to significant gains in the overall cost of climate policy.

The third part presents results of a survey conducted among the main economic and environmental associations in Switzerland. The survey reveals conflicting views on economic instruments. It shows how the social acceptability of these instruments can be improved in taking explicitly into account these opposing views of special interest groups. Therefore, policy scenarios should be selected in combining techno-economic models with empirical studies about their political and normative context.

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Authors and Affiliations

  1. Centre of Human Ecology and Environmental Sciences, University of Geneva, 40 Bd du Pont-d’Arve, CH-1211, Geneva, Switzerland

    Beat Bürgenmeier, Catherine Ferrier, Karin Ingold & Sylvain Perret

  2. Geneva School of Business Administration, University of Applied Sciences of Western Switzerland, Geneva, Switzerland

    Andrea Baranzini

  3. Graduate Institute of International Relations, University of Geneva, Geneva, Switzerland

    Céline Germond-Duret

  4. Paul Scherrer Institute, Villigen, Switzerland

    Socrates Kypreos & Alexander Wokaun

  5. International Institute for Applied Systems Analysis, Laxenburg, Austria

    Peter Rafaj

Authors
  1. Beat Bürgenmeier
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  2. Andrea Baranzini
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  3. Catherine Ferrier
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  4. Céline Germond-Duret
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  5. Karin Ingold
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  6. Sylvain Perret
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  7. Peter Rafaj
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  8. Socrates Kypreos
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  9. Alexander Wokaun
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Correspondence to Beat Bürgenmeier.

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Bürgenmeier, B., Baranzini, A., Ferrier, C. et al. Economics of climate policy and collective decision making. Climatic Change 79, 143–162 (2006). https://doi.org/10.1007/s10584-006-9147-x

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  • DOI: https://doi.org/10.1007/s10584-006-9147-x

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