The Challenges of Climate Policy |
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| Authors: | Timothy J Brennan |
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| Institution: | 1. Department of Public Policy, University of Maryland, Baltimore County;2. and Resources for the Future;3. This article was written at the invitation of Anne Plympton, Darryl Biggar and Robert Albon to present at the 10th Australian Competition and Consumer Commission Regulatory Conference (Surfer's Paradise, Queensland, Australia, 30 July 2009). I want to thank Anne Plympton, Darryl Biggar, Rob Albon and Katrina Huntington for the invitation and for helpful comments. This work has benefited enormously from discussions of these issues with Resources for the Future colleagues, especially Molly Macauley and Karen Palmer, and comments from Ingo Vogelsang and other participants at the ACCC Conference. Finally, criticisms and suggestions from the editor and reviewers greatly improved the article. |
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| Abstract: | Climate policy planners and the public should be aware of both economic challenges and arguments that may influence the intensity of the climate policies with which they have to cope. This article examines six economic challenges: cap‐and‐trade versus taxes, non‐price regulations, energy efficiency policies, mitigation versus adaptation, trade effects, and transmission planning. Three additional challenges affect the end itself: ‘fat tails’, discount rates, and whether environmental protection should be evaluated by willingness to pay. If future generations cannot compensate the present for climate policy costs, climate policy is inherently redistributive and cannot be evaluated through cost–benefit analysis alone. |
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