[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

International Perspective
GLOBAL WARMING
Many environmental problems are local in nature. The pollution
of a stream or a toxic waste site mainly affects people in
the neighborhood. But some environmental hazards have an
impact on the entire planet and therefore require international
cooperation. For instance, the Montreal Convention signed in
1990 limited the emissions of chemicals that had led to the
depletion of ozone in the atmosphere. Ozone depletion was
linked to a higher incidence of certain types of cancer caused
by radiation normally blocked by the ozone layer. The agreement
was remarkably successful: with little cost to the economy,
the use of these chemicals was phased out, even ahead
of schedule.
Today, the most serious global environmental problem is
probably global warming, the increased temperature of the
earth caused by the buildup of the so-called greenhouse gases,
such as carbon dioxide, that trap the sun’s energy just as a
greenhouse does. The evidence of the buildup of these gases
is strong, and there is mounting data about the consequences.
A series of international panels of experts have concluded
that the impacts are likely to be large: they include the melting
of the polar ice cap and a rise in the sea level, resulting in
the inundation of low-lying regions of the world. In 1992 at
Rio de Janeiro, an international convention was signed committing
the world’s governments to controlling the emission
of greenhouse gases. In 1997, a further agreement, making
the reductions binding, was signed in Kyoto. However, thenpresident
Bill Clinton never submitted the Kyoto Protocol on
global climate change to the Senate for ratification because
opposition to it was very strong. In 2001, President George
W. Bush announced formally that the United States would
not ratify the treaty. The outrage from the rest of the world at
this declaration was particularly strong because the United
States is the largest producer of greenhouse gases, emitting
36 percent of the world’s total. Opponents of the Kyoto
Protocol argue that it does not do enough to limit emissions
from rapidly developing economies such as China’s: while
mandatory limits are set for developed economies, developing
countries are subject only to voluntary limits. In 1997, the
U.S. Senate had voted 95–0 to oppose any agreement that did
not incorporate mandatory limits on developing countries as
well. In addition, many argue that the economic costs of
limiting emissions are too great.
Supporters of the treaty note that on a per capita basis,
emissions from the developing economies are much lower
than they are from the United States. Further, it seems unfair
to ask countries struggling to boost economic growth and
reduce poverty to bear the costs of limiting greenhouse
gas emissions, when it is the past pollution of the rich, developed
countries that has created the problem. Drawing
on arguments of equity, the developing economies such as
China and India called for mandatory limits on the rich countries
first, combined with initially voluntary targets for the
developing countries.
To come into effect, the Kyoto Protocol needed to be
ratified by a set of countries that accounted for 55 percent
of total greenhouse gas emissions in 1990. By 2004, industrialized
countries accounting for 44 percent of 1990 emissions
had ratified the treaty. It was finally pushed over the
55 percent hurdle in late 2004, when President Vladimir
Putin announced that Russia, which accounted for 17 percent
of 1990 emissions, would ratify the treaty. Russia had a
large economic incentive to vote for the Kyoto Protocol, since
it allows countries that reduce their emissions below the level
of their quota to sell the unused portion to countries that
fail to meet their target. Because of its economic contraction
following the collapse of the former Soviet Union, Russia’s
emissions are 25 percent lower than the 1990 level, while
the treaty required of the nation only a 5 percent reduction.
Thus, Russia can potentially earn billions by selling its
unused quotas.
408 ∂ CHAPTER 18 ENVIRONMENTAL ECONOMICS