Climate Policies: A Burden or a Gain?

16 Pages Posted: 4 Apr 2013

See all articles by Thierry Bréchet

Thierry Bréchet

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Henry Tulkens

Catholic University of Louvain - Center for Operations Research and Econometrics (CORE)

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Date Written: April 2, 2013

Abstract

That climate policies are costly is evident and therefore often creates major fears. But the alternative (no action) also has a cost. Mitigation costs and damages incurred depend on what the climate policies are; moreover, they are substitutes. This brings climate policies naturally in the realm of benefit-cost analysis. In this paper we illustrate the “direct” cost components of various policies, and then confront them with the benefits generated, that is, the damage cost avoided. However, the sheer benefit-cost criterion is not a sufficient incentive to induce cooperation among countries, a necessary condition for an effective global climate policy. Thus, we also explore how to use this criterion in the context of international climate cooperation.

Keywords: Climate Policy, Integrated Assessment, Cost-Benefit Analysis, Climate Cooperation

JEL Classification: Q54, H87, D61, D9, F42, Q2

Suggested Citation

Brechet, Thierry and Tulkens, Henry, Climate Policies: A Burden or a Gain? (April 2, 2013). FEEM Working Paper No. 21.2013, Available at SSRN: https://ssrn.com/abstract=2243423 or http://dx.doi.org/10.2139/ssrn.2243423

Thierry Brechet (Contact Author)

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Henry Tulkens

Catholic University of Louvain - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium
+32 10 47 43 21 (Phone)
+32 10 47 43 01 (Fax)

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