How High are the Costs of Kyoto for the US Economy?

TitleHow High are the Costs of Kyoto for the US Economy?
Publication TypeTyndall Working Paper
SeriesTyndall Centre Working Papers
Tyndall Consortium Institution

Cambridge

Secondary TitleTyndall Centre Working Paper 4
AuthorsBarker, T., and P. Ekins
Year of Publication2001
Abstract

Estimates of the costs of implementing the Kyoto protocol are uncertain and most are based on assumptions that necessarily imply high costs. A selection of alternative (often more realistic) assumptions gives estimates that suggest net benefits rather than costs. One high-cost estimate is from the US Energy Information Administration but it is based on a rapid short-term adjustment to Kyoto-type targets and the model does not include the flexibility mechanisms. Another high-cost (but long-term) estimate is from the Oxford model and suggests a 4% cost of US GDP by 2020 to achieve Kyoto targets without the flexible mechanisms. It is shown that this estimate is based on a wrong interpretation of the literature, a confusion of short-term with long-run costs, and a selection of worst-case assumptions and parameters. Provided policies are expected, gradual and well-designed, the costs for the US of Kyoto are likely to be insignificant.

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