The Kyoto Protocol Is Cost-effective

Abstract

Despite recent advances, there is a high degree of uncertainty concerning the climate change that would result from increasing atmospheric greenhouse gas concentrations. Also, opponents of the Kyoto Protocol raised the key objection that reducing emissions would impose an unacceptable economic burden on businesses and consumers. Based on an analysis of alternative scenarios for electricity generation in Italy, we show that if the costs in terms of damage to human health, material goods, agriculture, and the environment caused by greenhouse gas emissions are included in the balance, the economic argument against Kyoto is untenable. Most importantly, the argument holds true even if we exclude global external costs (those due to global warming), and account for local external costs only (such as those due to acidic precipitation and lung diseases resulting from air pollution).

Keywords

• cost-benefit analysis
• electric power generation
• environmental costs
• externalities
• greenhouse gasses
• Italian economic impacts
• Kyoto Protocol