A New Composite Index for Greenhouse Gases: Climate Science Meets Social Science

Abstract

Global greenhouse gas emissions have increased at a rate of nearly 2% per year since 1970, and the rate of increase has been increasing. The contribution of greenhouse gases to global warming constitutes an environmental management challenge requiring interdisciplinary effort and international cooperation. In an effort to meet this challenge, the Kyoto Protocol imposes limits on aggregate CO2-equivalent emissions of four greenhouse gases, although it permits countries to trade off one gas for another at specified rates. This requires a definition of trade-off rates, which the Protocol specifies as Global Warming Potentials, although these have been controversial since their introduction. The primary source of concern has been the constancy of the trade-off rates, both across countries and through time. We propose a new composite index that allows freely variable trade-off rates, thereby facilitating the design of efficient abatement policy. In a pair of exercises we compare our composite index with that used by the Protocol. In both exercises we reject the constancy of trade-off rates, although despite the significantly different weighting schemes we find a degree of concordance between the two greenhouse gas indices.

Keywords

• global warming
• greenhouse gases
• aggregation
• composite index
• DEA (data envelopment analysis)