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Climatic Change

, Volume 77, Issue 3–4, pp 291–309 | Cite as

The Cost of Using Global Warming Potentials: Analysing the Trade off Between CO2, CH4 and N2O

  • Daniel J. A. Johansson
  • U. Martin Persson
  • Christian Azar
Open Access
Article
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Abstract

The metric governing the trade-off between different greenhouse gases in the Kyoto Protocol, the Global Warming Potentials (GWPs), has received ample critique from both scientific and economic points of view. Here we use an integrated climate-economic optimization model to estimate the cost-effective trade-off between CO2, CH4 and N2O when meeting a temperature stabilization target. We then estimate the increased cost from using GWPs when meeting the same temperature target. Although the efficient valuation of the gases differs significantly from their respective GWPs, the potential economic benefit of valuing them in a more correct way amounts to 3.8 percent of the overall costs of meeting the temperature stabilization target in the base case. In absolute value, this corresponds to an additional net present value cost of US$2000100 billion. To corroborate our findings we perform a Monte Carlo-analysis where several key parameters are randomly varied simultaneously. The result from this exercise shows that our main result is robust to a wide range of changes in the key parameter values, giving a median economic loss from using GWPs of 4.2 percent.

Keywords

Discount Rate Global Warming Potential Climate Sensitivity Abatement Cost Marginal Abatement Cost 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  • Daniel J. A. Johansson
    • 1
  • U. Martin Persson
    • 1
  • Christian Azar
    • 1
  1. 1.Department of Physical Resource TheoryChalmers University of TechnologyGöteborgSweden

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