Pegram Lecture 1, August 10, 2012

The Kyoto Protocol and
The Carbon Cycle
Pegram Lecture 1
Brookhaven National Laboratories, Long Island NY
Graciela Chichilnisky
www.chichilnisky.com
Columbia University

Columbia Consortium for Risk Management 1
(CCRM) www.columbiariskmanagement.net

What is Globalization?

• A nations‟ economic output is increasingly traded
through the international market

• 3% in 1950‟s USA - about 18% today

• Globalization connects nations and their people
It changes the world economy

2

Ratio of merchandise exports to GDP, 1950-2005
(Percentage, real trade and GDP at 1990 prices and exchange rates)

25.0

20.0
Percent

15.0
World Average
10.0

5.0

0.0
1950 1998 2005
Years

Source: World Trade Organization (WTO): World Trade Report.
http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm


World Exports and GDP, 1950-2005. (Volume indices, 1950=100)
Semi-log scale
10000

Average grow th rates,
1950-2005
5000
Total exports 6.2
Manufactures 7.5
GDP 3.8
2500
Manufactures

Total
1000

GDP
500

250

100
1950 1960 1970 1980 1990 2000

Source: World Trade Organization (WTO): World Trade Report. http://www.wto.org/english/res_e/reser_e/wtr_arc_e.htm

Globalization and Its Risks

• Globalization is not a new phenomenon
• But has achieved historical proportions
• It is a fact – it is here today
• It has benefits – e.g. gains from trade
• But produces risks – political, economic and for
the world‟s critical resources
• It has deeply increased the Global Divide

5

A position on globalization

• Globalization is a global force
• It is here today
• Are you in favor or against the sun rising?
• The issue is what to do with globalization
• How to transform it into a positive force

6

A historical first

• Todays‟ globalization breaks with the past
• Where does it come from?
• What are the risks it creates?
• How to benefit from Globalization and how to
avert its main risks?
• How to overcome resource depletion, the global
wealth divide and even extinction of our species?

7

Why a Historical First?

The facts

8

Human beings, or their close genetic relatives, have
lived on Earth for several million years

Yet only recently has human activity reached levels
at which it can affect fundamental natural
processes

• the concentration of gases in the
atmosphere (CO2, Ozone)
• the planet’s water mass
• The complex web of species which
constitute life on earth


Global risks

• Changes to the planet‟s atmosphere
• Changes to the world‟s water mass
• Changes to the world‟s biodiversity

10

Source: Des Marais (2000) “When did Photosysnthesis
emerge on Earth?” Science 289 5485, 1703 – 05.


Source: Rice, Patricia R. and Norah Moloney (2005) Biological
anthropology and prehistory: exploring our human ancestry,
Pearson Education: Boston

Climate Change a Major Risk

• A risk of survival

• Why focus on that?

• How?

• What to do?

14

In 1996, the IPCC reported that
human induced emissions of carbon
have a discernible effect on climate

• Scientific uncertainty persists

• But the risk of climate change is real
and potentially catastrophic


Computer models match observed ΔT on all continents
Black lines are decadally averaged observations. Blue bands are computer models
with natural forgings only. Pink bands are computer models with human + natural forgings.

Source: IPCC Working Group 1: The Physical Science
Basis of Climate Change. IPCC 2007: WG1-AR4

Source: : Arctic Climate Impact Assessment
(ACIA) 2004

Source: “In Dead Water” UNEP 2008
http://www.unep.org/pdf/InDeadWater_LR.pdf

Sea ice is receding

Source: NASA


Coastal glaciers are retreating

Muir Glacier, Alaska, 1892-2005

September 1892 August 2005

Source: NSIDC/WDC for Glaciology,
Boulder, compiler. 2002, updated 2006.
Online glacier photograph database.
Boulder, CO: National Snow and Ice Data
Center

Greenland Ice Sheet,
2001-2005

Source: Satellite Imaging Corporation,
http://www.satimagingcorp.com/gallery
/aster-greenland-ice-sheet.html


Harm is already occurring
Total power released by tropical cyclones (green) has increased along with
sea surface temperatures (blue)

Source: Kerry Emanuel. Anthropogenic Effects
on Tropical Cyclone Activity, 2006.
http://wind.mit.edu/~emanuel/anthro2.htm (CCRM) www.columbiariskmanagement.net

Number of flood events by continent and decade since 1950

Source: Millennium Ecosystem Assessment, http://www.millenniumassessment.org/en/index.aspx


Number of major wild fires by continent and decade since 1950

Source: Millennium Ecosystem Assessment, http://www.millenniumassessment.org/en/index.aspx


Where we’re headed: temperate-zone agriculture

Corn and wheat yields versus temperature increase in the temperate zone
averaged across 30 crop modeling studies. All studies assumed a positive
change in precipitation. CO2 direct effects were included in all studies.

Source: Easterling W. E., Apps M. Assessing the consequences of climate change for food and forest
resources: A view from the IPCC, Climatic Change 70 (1-2) 2005 : 165-189.


Source: Millennium Ecosystem Assessment 2005. Ecosystems and Human Well-Being Synthesis.
http://www.millenniumassessment.org/en/index.aspx


The smoking gun for
human influence
Top panel shows
best estimates of
human & natural
forcings 1880-2005.

Bottom panel shows
that state-of-the-art
climate model, given
these forcings,
reproduces almost
perfectly the last 125
years of observed
temperatures.
Source: Hansen et al., Science 308, 1431, 2005.

2004
Source: J. Hansen et al., PNAS 103: 14288-293 (26 Sept 2006), updated by NASA Goddard Institute
for Space Studies, GISS Surface Temperature Analysis

Rapidly increasing ozone holes

Source: NASA. http://science.hq.nasa.gov/missions/satellite_22.thm

How the greenhouse effect works

Source: Sources: Okanagan University collage in Canada, Department of Geography, University of Oxford, school of geography; United States
Environmental Protection Agency (EPA), Washington; Climate change 1995, The science of climate change, working group 1 to the second assessment
report of the IPCC, UNEP and WMO, Cambridge Univ. Press, 1996.

Source: US Environmental Protection Agency (EPA)


Composition of greenhouse gases

Source: Sources: Emission Database for Global Atmospheric Research (EDGAR) 3.2 Fast Track 2000. Netherlands Environmental Assessment Agency.
www.mnp.nl/edgan/. Accessed 3/21/07


International dimensions of
environmental policy
Many environmental problems are global in
scope. Solving them requires international
cooperation

• The planet’s ozone’s layer and CFC’s
emissions
• Loss of biodiversity
• Greenhouse gases and climate change-CO2
emissions
• Acid rain and international transport of SO2


• Most of the destruction of the earth’s
ecosystems is driven by economic
incentives

• Forests, where most known
biodiversity resides, are cleared for
the extraction of natural resources
(oil, wood products) or to grow cash
crops and graze livestock


Source: Food and Agriculture
Organization of the United
Nations Global Forest
Resources Assessment 2005:
Progress towards sustainable
forest management
37
Columbia Consortium for Risk Management

Population and the global
environment
The regions with the lowest population
growth are the main cause of global
environmental damage:

●biodiversity loss

●carbon emissions

●CFC emissions (ozone layer)


Emissions per capita vs. Population

Source: UN Millennium Report Columbia Consortium for Risk Management 40

Emissions per capita vs. Population
Population vs. Carbon Emissions per Capita
CO2 Emissions per Capita (Metric Tons of Carbon)

22
20
18
Canada
16
14 Finland
12
10 Germany
8 United Kingdom y = -1.2547Ln(x) + 11.724
R2 = 0.2566
6
4 Mexico China
2 Egypt India
0
0 200 400 600 800 1000 1200 1400
Population (Billions)

Sources:
UN World Population Prospects: The 2006 Revision;
International Energy Agency 2003

Sources: Earthtrends Database of the World
Resource Institute (WRI) http://earthtrends.wri.org/


GNI per capita vs. Carbon Emissions per capita

Horizontal axis: GNI/capita
Vertical axis: CO2/capita

Source: UNEP-Building and Climate Change
Report-2007 Columbia Consortium for Risk Management 43

Total CO2 Emissions (Million Metric Tons)

GDP (2004 Billion $US)

Source: Earthtrends Database of the World Resource
Institute (WRI) http://earthtrends.wri.org/

Source: US Energy and Information Administration,
International Energy Annual 2004

Source: US Energy and Information Administration,
International Energy Annual 2009


Source: Pimentel, D. et al. (2002). Renewable
energy: Current and potential issues.
BioScience, 52 (12), 1111-1120.


Source: US Energy and Information
Administration (EIA) 2004

Source: US Energy and Information
Administration (EIA) 2010


Cumulative Emissions (1900-2002): CO2 Emissions (2002) Population (2002)
Source: World Resource Institute Source: World Resource Institute Source: World Resource Institute.

Source Where WRI Got Data: Sources Used by World Resource Institute: Sources where WRI Got Data From:
WRI calculates carbon dioxide emissions from 3 sources
EIA. 2004. International Energy Annual 2002. Available Population Division of the Department of Economic and Social
EIA. 2004. International Energy Annual 2002. Available online online at: http://www.eia.doe.gov/iea/carbon.html. Affairs of the United Nations Secretariat. 2007. World Population
at: http://www.eia.doe.gov/iea/carbon.html. Prospects: The 2006 Revision.
IEA. 2004. CO2 Emissions from Fuel Combustion (2004
IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at:
edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.
http://data.iea.org/ieastore/co2_main.asp.
GDP (2002)
Marland, G., T.A. Boden, and R. J. Andres. 2005. Source: World Resource Institute.
Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Global, Regional, and National Fossil Fuel CO2
Regional, and National Fossil Fuel CO2 Emissions. in Trends: Emissions. in Trends: A Compendium of Data on Global Source WRI Got Data From:
A Compendium of Data on Global Change. Carbon Dioxide Change. Carbon Dioxide Information Analysis Center,
Information Analysis Center, Oak Ridge National Laboratory, Oak Ridge National Laboratory, U.S. Department of Development Data Group, The World Bank. 2007. 2007
U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. Energy, Oak Ridge, Tenn., U.S.A. World Development Indicators Online. Washington, DC: The
World Bank


In the future:
Most emissions could originate in
developing countries as they
industrialize

• Industrialization is resource intensive

• North-South issues


Climate change:

• The causes of climate changes are
economic

• The effects are physical and
biological


Since the effects are physical,
economists underestimate them

Since the causes are economic,
physical scientists cannot find
solutions


Climate change requires
thinking and acting across social
and physical disciplines

A major challenge


Climate change is global

It therefore requires us to focus on:

• Global socioeconomic issues
• Global equity


To address these issues we
introduced in 1974 the concept
of development based on the
satisfaction of “basic needs”
The Bariloche Model: “Catastrophe or New Society: A
Latin American World Model” A. Herrera, G. Chichilnisky
et al,1974

It was a response to the Club of Rome “Limits to Growth”
model – D. Meadows, MIT


Economic development based on
the satisfaction of basic needs

Basic Needs were introduced to rethink
development patterns, so they would be consistent
with the environmental constraints (Chichilnisky
1974, 1977)

Bariloche Model (1974-76) and sustainability

Bruntland Report, needs and sustainability


Sustainable development

• Sustainable Development is anchored on the concept of
Basic Needs voted by 150 nations in 1992 UN Earth
Summit of Rio de Janeiro as the cornestone of efforts to
define Sustainable Development, cf. G. Heal Valuing the
Future 2000.

“Development that meets the needs of the present
without compromising the ability of future generations to
meet their own needs”

Our Common Future, Bruntland Report 1987


Global Environmental Policy

Requires Equity and Efficiency
“North South Trade and the Global Environment”, G. Chichilnisky
American Economic Review, 1994
Environmental Markets: Equity and Efficiency, G. Chichilnisky, G.
Heal Kluwer publishers 1998.


How did it all happen?

A brief history

of the

Anthropocene

58

Scientists find that most of the
damage to biodiversity and the
atmosphere has occurred in the last
60 years

WHY?

What happened 60 years ago?

•Emissions of greenhouse gases and
destruction of biodiversity are connected to
the rapid industrialization since World War II


History

• After World War II, the U.S. became
40% of the world economy following
the destruction of Germany and
Japan

• Today the U.S. is back to 25%, as it
was before World War II


The U.S. pattern of economic
development became a benchmark

• based on rapid industrialization led
by deep and extensive use of natural
resources

• A frontier approach to economics


Global institutions were created that
reinforced this vision of resource-intensive
economic development

• The World Bank
• The International Monetary Fund-Bretton Woods
• The United Nations
• The current system of National Accounts

• The American Dream went Global



25.0

20.0
Percent

15.0
World Average
10.0

5.0

0.0
1950 1998 2005
Years



Semi-log scale
10000

1950-2005
5000
Total exports 6.2
Manufactures 7.5
GDP 3.8
2500
Manufactures

Total
1000

GDP
500

250

100
1950 1960 1970 1980 1990 2000


Growth in the volume of world merchandise trade and GDP, 1996-2006
(Annual percentage change)
12
GDP
Merchandise exports
10

8
Average export
growth 1996-06
6
Average GDP
growth
4 1996-06

2

0
1996 97 98 99 00 01 02 03 04 05 2006

-2


GDP per Capita (1990 International Geary-Khamis Dollars)

Year

Source: Angus Maddison, Historical Statistics for the World Economy: 1 – 2006 AD.


Source: US EIA 2010


Sources: UN FAO 2010 World Roundwood and Sawnwood Total Production


Source: US Energy and Information Administration (EIA)



Year



Source: World Bank (2002 data)

Economics drives global change:

• In the North, emission of CO2 is linked to
intensive energy use for production of
goods and services

• In the South, intensive destruction of
ecosystems for agricultural production
and mineral extraction for export
markets


Sources: Earthtrends Database of the World
Resource Institute (WRI) http://earthtrends.wri.org/


Source: IPPC

Cumulative Emissions (1900-2002): CO2 Emissions (2002) Population (2002)
Source: World Resource Institute Source: World Resource Institute Source: World Resource Institute.

Source Where WRI Got Data: Sources Used by World Resource Institute: Sources where WRI Got Data From:
WRI calculates carbon dioxide emissions from 3 sources
EIA. 2004. International Energy Annual 2002. Available Population Division of the Department of Economic and Social
EIA. 2004. International Energy Annual 2002. Available online online at: http://www.eia.doe.gov/iea/carbon.html. Affairs of the United Nations Secretariat. 2007. World Population
at: http://www.eia.doe.gov/iea/carbon.html. Prospects: The 2006 Revision.
IEA. 2004. CO2 Emissions from Fuel Combustion (2004
IEA. 2004. CO2 Emissions from Fuel Combustion (2004 edition). Available online at:
edition). Available online at: http://data.iea.org/ieastore/co2_main.asp.
http://data.iea.org/ieastore/co2_main.asp.
GDP (2002)
Marland, G., T.A. Boden, and R. J. Andres. 2005. Source: World Resource Institute.
Marland, G., T.A. Boden, and R. J. Andres. 2005. Global, Global, Regional, and National Fossil Fuel CO2
Regional, and National Fossil Fuel CO2 Emissions. in Trends: Emissions. in Trends: A Compendium of Data on Global Source WRI Got Data From:
A Compendium of Data on Global Change. Carbon Dioxide Change. Carbon Dioxide Information Analysis Center,
Information Analysis Center, Oak Ridge National Laboratory, Oak Ridge National Laboratory, U.S. Department of Development Data Group, The World Bank. 2007. 2007
U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. Energy, Oak Ridge, Tenn., U.S.A. World Development Indicators Online. Washington, DC: The
World Bank


DISTRIBUTION OF TROPICAL FORESTS

Source: Food and Agricultural Organization of the United Nations

Source: www.marietta.edu


HOLDRIDGE LIFE ZONE CLASSIFICATION


The North Produces Most Risks

• Most CO2 emissions

• Most CFC emissions

• Most biodiversity destruction


The South suffers most of the
effects. It is most vulnerable to the
effects of climate change on:

• food production

• living conditions


The North produces most risks

The South bears them most


The origins of today’s environmental
dilemmas involve the historical coupling
of two different worlds through the
international market: the industrialized
and the developing regions, the North
and the South


•The globalization of the world economy
since World War II has intensified a
pattern of resource use by which
developing nations extract most natural
resources, exporting them to
industrialized nations at prices that are
often below replacement cost


Source: World Bank 2004 data


Source: World Trade Organization (WTO) 2005 data


Source: Dani Rodrik. “Sea Changes in the World Economy.” Paper prepared for the Techint
conference, Buenos Aires, August 30, 2005



25.0

20.0
Percent

15.0
World Average
10.0

5.0

0.0
1950 1998 2005
Years



Semi-log scale
10000

1950-2005
5000
Total exports 6.2
Manufactures 7.5
GDP 3.8
2500
Manufactures

Total
1000

GDP
500

250

100
1950 1960 1970 1980 1990 2000


12
GDP
Merchandise exports
10

8
Average export
growth 1996-06
6
Average GDP
growth
4 1996-06

2

0
1996 97 98 99 00 01 02 03 04 05 2006

-2


Through the international market,
industrial nations, housing 20% of
the world population:

• Consume most forest products (pulp,
wood)
• Consume most products produced
through the clearing of forests (cash
crops, livestock)

The North’s economy represents the
main driving force:

• Has used, and continues to use,
most of the global resources and
environment,
• Produces 60% of all CO2 emissions,
• Consumes most forest and mineral
products,
• Emits most CFCs

Source: WRI

■The South, with 80% of the world’s
population, extracts and exports most
resources, which are mostly consumed in
the North.

■Resources – such as petroleum and wood
– are traded at prices which are below real
costs, leading to increased dependence on
resource use and to a deepening North-
South divide

Source: Baker, E, Bournay, E, Harayama, A, & Rekacewicz, P (2004). Vital Waste Graphics. UNEP/DEWA/GRID-Europe,
RetrievedJan. 24, 2009, from http://www.grida.no/_res/site/file/publications/vital-waste/wastereport-full.pdf


GREENHOUSE INDEX: COUNTRIES WITH HIGHEST
GREENHOUSE GAS EMISSIONS, 2004

Source: CAIT


Total Exports

Exports of Raw
Materials

Source: World Trade Organization (WTO). World Trade Overview 2005.
http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf


The UN Food and Agriculture
Organization (FAO) has estimated that
direct emissions from meat production
account for about 20% of the world's
total greenhouse gas emissions

Exceeding emissions from the world’s
entire transportation system
•


Year



The U.S. uses 24.3% of the
world’s oil output yearly, even
though it has about 4% of the
world’s population

SOURCE: CIA World Factbook, December 2008


It is not how much you export but what you export

Note: “income content of exports” (EXPY) represents the income level of the typical
country with your export basket. Source: World Trade Organization (WTO). World Trade
Overview 2005. http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf


The remarkable rise of China

Source: Dani Rodrik. “Sea Changes in the World Economy.” Paper prepared for the Techint
conference, Buenos Aires, August 30, 2005


The remarkable rise of China

Source: Dani Rodrik, op.cit. 2005

Source: United Nations Comtrade Database for Oil Export Data. http://comtrade.un.org/pb/CountryPages.aspx?y=2007.
World Bank for GDP data


Pattern of World Trade

• Since WWI, world trade became the exports of
manufactured and capital intensive products from
the North against raw materials mostly exported
by the South
• Previously imposed through colonialism, this
pattern became entrenched through „market
colonialism‟ after the liberation movements of the
mid 20th century
• „Export led growth‟
• An illusory theory of comparative advantages 111

Why did this happen?

• The economics of North-South Trade

• Its impact on the Global Environment

• G. Chichilnisky “North South Trade and the Global Environment”
AER 1994

112

This pattern of trade after WWII can
be explained in substantial measure
by a historical difference in property
rights in the developing and
industrial worlds


Developing countries hold most
resources as common property
while in industrial economies
these are usually private
property


Natural resources, such as forests and
mineral resources are often held as
common property in developing
countries. They are often used on a
“first come first served” basis in an open
access process


In a world where agricultural societies
trade with industrial societies,
international markets magnify the
extraction of resources. The result is
that exports and world use of natural
resources exceed what is optimal


The resulting agricultural output
is mostly sold in international
markets (pulp and wood, cash
crops, livestock, Barbier)


Differences in property rights
explain:

• The South’s over-extraction of
natural resources for the
international market

• Why the South sells natural
resources below real cost
Chichilnisky, American Economic Review, 1994


Source: World Trade of IT products by region 2005, Source Comtrade database and WTO. Exports and Imports,
This Chart appears on Page 17, World Trade Report 2007 WTO
http://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report07_e.pdf


Note: The graph corresponds to the regression system in Table 3, column 2 (next slide). The curve shows the partial relation
between the Gini coefficient and the log of per capita GDP, holding fixed the estimated effects of the explanatory variables
other than the log of per capita GDP and its square. Source: Robert Barro. Inequality and Growth Revisted. ADB January
2008. http://aric.adb.org/pdf/workingpaper/WP11_%20Inequality_and_Growth_Revisited.pdf


Source: Robert Barro.
Op.cit. 2008.


Source: World Trade Organization (WTO). World Trade Overview.


Note: GNNP (Green Net National Product) is GNP minus the damage from carbon dioxide emissions, depreciation of produced
assets and depletion of forests and subsoil assets. Source: “When Self Interest is Key to a Better Environment.” Nature. Volume 395.
October 1998. http://www.nature.com/nature/journal/v395/n6701/pdf/395428a0.pdf


Without computing the “replacement
costs” of extraction, there is a false
impression of resource abundance
and comparative advantage leading
to a global version of the “tragedy of
the commons”


Note: GNNP (Green Net National Product) is GNP minus the damage from carbon dioxide emissions, depreciation of produced
assets and depletion of forests and subsoil assets. Source: “When Self Interest is Key to a Better Environment.” Nature. Volume 395.
October 1998. http://www.nature.com/nature/journal/v395/n6701/pdf/395428a0.pdf


Source: Development Data Group, The World Bank. 2008. 2008 World Development Indicators
Online. Washington, DC: The World Bank. Available at: http://go.worldbank.org/U0FSM7AQ40.
And World Trade Organization (WTO). World Trade Overview.

Barrels of Oil (Billions)

Source: Energy Information Administration. August 27, 2008. http://www.eia.doe.gov/emeu/international/oilreserves.html


12
GDP
Merchandise exports
10

8
Average export
growth 1996-06
6
Average GDP
growth
4 1996-06

2

0
1996 97 98 99 00 01 02 03 04 05 2006

-2


Source: World Trade Organization (WTO) 2005 data


Source: International Monetary Fund (IMF). World Economic Outlook 2008.
http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm#ch1fig


Source: Alan Thein Durning. “How Much is Enough?” The Worldwatch Environmental Alert Series. 1992
http://www.ncseonline.org/PopPlanet/ePopulationReports/rest/abstracts/148954.pdf

Source: Baker, E. et al. (2004). Vital Waste Graphics. UNEP/DEWA/GRID-Europe, Retrieved Jan. 24, 2009, from
http://www.grida.no/_res/site/file/publications/vital-waste/wastereport-full.pdf.


Source: US Energy and Information Administration (EIA) 2004 Data


Source: International Monetary Fund (IMF). World Economic Outlook 2008.
http://www.imf.org/external/pubs/ft/weo/2008/01/index.htm#ch1fig


As a result of this trade pattern
the North over-consumes
resources, and the South over-
extracts them

Chichilnisky, American Economic Review, 1994


As a consequence of these
historical facts, the Earth
Resources are undervalued in
international markets


Because most resource-
intensive exports come from
developing nations, their own
economies and people are
undervalued in economic terms


Resource intensive trade leads
to an increasingly divided North-
South world



Year



Privatizing resources in
developing countries may be
impractical in any reasonable
time scale.

An alternative is to privatize the
global commons.


Rather than privatizing forest
and mineral deposits “on the
ground”, we can privatize and
trade the rights to use the
atmosphere as a carbon sink,
and the use of biodiversity


The Kyoto Protocol
• Signed by 160 nations in 1997 – including USA

• International Law since 2005

• First international agreement based on a new global
market: for trading the rights to use the world‟s
atmosphere
• The United Nations voted to extend its limits in COP 17
Durban December 2011 until 2015

New Economic Findings
from the UN Carbon Market

• Efficiency in trading permits requires
more emission rights to developing
countries

• Why?


Typically efficiency requires that
those with fewer endowments of
private goods should have a
higher allocation of property
rights on the public goods
■Chichilnisky, 1992-3
■Chichilnisky and Heal, 1993
■Chichilnisky, Heal and Starrett, 1993-4


Kyoto Protocol:
The way ahead
• How to develop incentives for international
cooperation?
• How to obtain support from the private
sector?
• Will the three flexibility mechanisms be
unified
• How to regulate private sector emission
traders?
• How to achieve equitable markets?


The World needs more Energy

• The developing nations need energy
• Most of all energy increase (doubling today‟s use
by 2030) expected to come from developing
nations (IEA)
• But today power plants are 45% of the global
emissions of CO2
• How to resolve this cruel dilemma?

151

The clean development mechanism of the
Kyoto Protocol has already transferred
$50Bn to poor nations for private projects
decreasing carbon emissions – The World Bank
“Trends and Facts of the Carbon Market” 2011

The CDM must be extended to Carbon
Negative projects to allow funds for Latin
America, Africa and AOSIS –

Why?

And How?

The next lectures will address
these issues and the rays of
hope for a solution


Pegram Lecture 1, August 10, 2012

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