Equity and Efficiency in Environmental
Markets: Global Trade in Carbon Dioxide
This chapter addresses a topical issue: the creation of a global market for carbon dioxide (CO2) emission permits.1 The recent adoption in the Kyoto Protocol of an ambitious target for global CO2 emission has focused attention on policy instruments for achieving this goal. In addition, increasing awareness of the economic burden of environmental protection has produced an interest in market-based policy instruments that can minimize detailed government intervention. As a result markets for emission rights are today the approach of choice of the U.S. administration.2
This chapter is based on Chichilnisky, G., Heal, G., and Starrett, D. “International Markets with Emissions Rights of Greenhouse Gases: Equity and Efficiency,” Center for Economic Policy Research Publication No. 81, Stanford University, Fall 1993.