Climate Critique

By Mendelsohn, Robert | Harvard International Review, Fall 2004 | Go to article overview

Climate Critique


Mendelsohn, Robert, Harvard International Review


David Victor and Joshua House ("A New Currency: Climate Change and Carbon Credits," Summer 2004) join a long list of critics who have become disenchanted with the international negotiations that led to the Kyoto Protocol. The Protocol ties its targets to 1990 emission levels of greenhouse gases. This approach has been ridiculed because it creates huge "paper reductions" in countries whose economies have fallen (states of Eastern Europe and the former Soviet Union) and it disproportionately burdens countries whose economies have grown (the United States). The Kyoto Protocol is also incomplete because it only covers the next decade and does not apply to developing countries at all.

From Kyoto's ashes, Victor and House champion a "new approach" of using carbon credits to control global warming. These two authors are done with grand international schemes. They argue that the world should move to a system of national carbon credits. Every country should voluntarily create these credits as a "bottom-up" strategy. According to Victor and House, adopting national permits for greenhouse gases is like adopting good monetary policy.

Victor and House, however, have forgotten a basic principle of global pollutants. Although the cost of reducing emissions is entirely borne by the country with regulations, the benefits are shared with the world. The country doing the abatement gets only a small share of these benefits. A strong national currency, in contrast, will primarily benefit just the country with the strong currency. …

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