Environmental and Resource Economics

, Volume 14, Issue 1, pp 33-49

First online:

Spatial and Temporal Efficiency in Climate Policy: Applications of FUND

  • Richard S.J. TolAffiliated withInstitute for Environmental Studies, Vrije Universiteit

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FUND is an integrated assessment model of the interactions between climate and economy. Nine world regions emit greenhouse gases, and suffer damages from climate change. A number of greenhouse gas emission reduction policies are compared, including optimal and cost-effective strategies, strategies with early and late abatement, and strategies with and without international co-operation. The analyses confirm that co-operation matters, resulting in substantially lower costs or higher welfare. The real commitments of policy targets based on an absolute level (e.g., 1990 emissions) are hard to estimate because of the uncertainties in the baseline. Postponing action conflicts with minimising costs and maximising welfare, but so does sharp emission reduction at the short-term as proposed in the Kyoto Protocol.

climate change emission reduction efficiency cost-effectiveness equity JEL classification: Q25, Q40