Climate Change & Int Coop: International Agreements

Question 1

What is a “Safe Minimum Standard” (SMS)?

Answer 1

Where a policy change is constrained by what is thought to be a ‘safe’ threshold level of climate change

Question 2

Why has the Safe Minimum Standard (SMS) approach become more popular in recent years?

(2 reasons)

Answer 2

Climate change science increasingly points to non-linearities in the dose-response function linking temperature change to induced damages

Positive feedback loops between GHG concentration rates and temperature levels become more likely to kick in as GHG concentrations rise

Question 3

In what way do maximum allowable GHG concentrations and maximum allowable temperature increases bear a close relationship?

Answer 3

For any given level of climate sensitivity, one allowable level can be deduced from the other

Question 4

What is the key trade-off for policy makers in terms of standard optimising policies?

(3 progressive points)

Answer 4

Such policies typically ramp up, gradually tightening control.

Hence costs are incurred later when they are less significant in PV terms.

However this lets the climate go to greater extremes

Question 5

Name 3 climate strategies

Answer 5

Geoengineering

Adaptation

Mitigation

Question 6

Give 3 examples of adaptation

Answer 6

Installing sea walls

Expanding public health facilities

Developing agricultural technology

Question 7

What is a big benefit to adaptation?

2 points

Answer 7

Successful adaptation reduces the need for mitigation

I.e. adaptation and mitigation are substitutable

Question 8

Why have policy makers previously refrained from adopting adaptation techniques?

Answer 8

It has been seen as “admitting defeat” in the past

Question 9

What is the advantage of adaptation over mitigation?

Answer 9

Adaptation does not depend on the compliance of other companies, whereas mitigation does

Question 10

What is “adaptive capacity”?

Answer 10

The ability of a society to adapt to changing circumstances

Question 11

What 7 things does the adaptive capacity of a country depend on?

Answer 11

• The amount of capital that a country has
• Available technology
• Resources
• Human/social capital
• Risk sharing
• Decision making
• information management and attribution

Question 12

Why are GHG issues hard to solve?

Answer 12

Because it is a public good problem

Question 13

What 4 things characterise a public good problem?

Answer 13

Non-excludability

Spatial distribution of GHG emissions

Common but different responsibilities

Temporal externalities

Question 14

What does non-excludability means for trying to solve GHG issues?

Answer 14

Countries can freeride on the abatement activities of others

Question 15

Name 3 key international agreements that addressed climate change

Answer 15

Rio Earth Summit (1992)

First Conference of the Parties (COP-1, Berlin, 1995)

Kyoto Protocol (1997)

Question 16

What was the key agreement from the Rio Earth Summit (1992)?

Answer 16

“Common but differentiates responsibilities” - all counties share a common problem but some had more responsibility to take action than others

Question 17

What is the problem with the “Annex 1” countries who signed up to COP-1 and Kyoto?

(2 points)

Answer 17

They can’t reduce global emissions on their own

Rich countries in the group have a much higher income per capita than the poorer ones

Question 18

What is the FCCC?
(2 points)

What did it establish?
(2 points)

Answer 18

The Framework Convention on Climate Change

Industrial countries would be the only ones initially required to reduce emissions

These countries would need to reduce emissions to below 1990 levels

Question 19

Describe the Kyoto protocol

4 points

Answer 19

First substantial agreement to set country-specific GHG limits

No binding commitments on developing countries

Plan to cut emissions by 5% relative to 1990 levels between 2008 and 2012

Introduced a cap and trade system

Question 20

Outline the 5 goals of the 2015 Paris Agreement

Answer 20

Mitigation
Transparency and global stocktake
Adaptation
Loss and Damage
Support

Question 21

What does “perfect mixing” mean in terms of social costs?

Answer 21

Social costs of carbon (SCC) to the world are the same regardless of where it is produced

Question 22

Give a formula for the social marginal cost of carbon produced by Northern countries

Explain verbally

Answer 22

SMC(W, N) = MC(N,N) + MEC(S,N)

I.e. the social marginal costs to the world from North’s emissions = the marginal cost suffered by the North because of its own actions + the marginal cost suffered by the South due to the North’s actions

Question 23

Give a formula for the social marginal cost of carbon produced by Southern countries

Answer 23

SMC(W, S) = MC(S,S) + MEC(N,S)

Question 24

What does “unilateral action” mean?

Answer 24

Than one agent acts to reduce its emissions but the other does not

Question 25

Draw 2 diagrams illustrating the effects of perfect mixing considering Northern and Southern Agents

Answer 25

[See your diagram sheet on Climate Change & Int Coop]

Question 26

Using the diagrams on your sheet, if the North reduces its emissions unilaterally then what are:

i) The costs to the North
ii) The benefit to Northern breathers
iii) The total benefit gain
iv) The benefit to Southern breathers
v) The global net effect?

Answer 26

i) F
ii) E+F
iii) E+F-F = E
iv) D
v) D+E

Question 27

Using the diagrams on your sheet, if the South reduces its emissions unilaterally then what are:

i) The costs to the South
ii) The benefit to Southern breathers
iii) The total benefit gain
iv) The benefit to Northern breathers
v) The global net effect?

Answer 27

i) F’
ii) E’ + F’
iii) E’+F’-F’ = E’
iv) D’
v) E’+D’

Question 28

Using the diagrams on your sheet, if there is cooperative action between the North and the South then what are:

i) Costs to the North
ii) Benefit to Northern Breathers
iii) Total Benefit to the North
iv) Costs to the South
v) Benefit to Southern Breathers
vi) Total Benefit to the South
vii) The global net effect?

Answer 28

i) C+B
ii) C+A’+B’
iii) A’+B’-B
iv) B’+C’
v) C’+A+B
vi) A+B-B’
vii) A’+B’-B+A+B-B’ = A’ + A

Question 29

Why might cooperation not happen?

Answer 29

If one country loses out i.e. if the total benefit for one country is

Question 30

If there is no incentive for a country to cooperate due to costs being low / benefits being high, then what could be done to make cooperation happen?

What is this concept known as?

Answer 30

The other could make a side payment to the non-cooperative country to give it incentive to cooperate

This is a “victim pays principle”

Question 31

Give two alternative systems to the “victim pays” principle

Answer 31

Global Carbon Trading Scheme (Cap and Trade)

Harmonised Carbon Tax

Question 32

What is a key problem with the Global Carbon Trading Scheme?

Answer 32

Prices are volatile (price volatility can be more harmful that quantity volatility)

Question 33

What is a harmonised carbon tax?

Answer 33

Where all countries set the same tax rate (achieves cost-effectiveness) but each country keeps the revenues that it collects

Question 34

What are the potential issues with harmonised carbon taxes?

2 points

Answer 34

The treatment of trade with countries that don’t participate in the scheme

May not be fair to impose the same level of carbon tax on all countries due to different economic states

Question 35

What are the benefits of the harmonised carbon tax?

4 points

Answer 35

Taxes have natural units so are easily harmonised

No volatile price issue

Less susceptible to corruption than permit systems

Countries can benefit from the “double dividend”