A The Kyoto Agreement on Mitigating Global Climate Change : Gains to All from Participation by Developing Countries

It is self-serving to emphasize the importance of involvement of one=s own agency. But economic thinking has been an important determinant of the Clinton Administration=s policy on climate change. Our role has included explaining the benefits of market-based solutions, especially the benefits of emissions trading, both domestically and internationally. We have said in Senate testimony that under a well-designed international agreement and domestic implementation, the costs to the United States of meeting the Kyoto obligations would be modest. Domestic implementation is to be market-based, using a system of tradable permits. In addition, trading of emissions permits among industrialized countries alone could reduce the costs by about half, and trading with developing countries could bring total costs down by more than eighty percent of what the costs would be if all reductions in emissions had to be accomplished domestically.