Climate change will lead to more precipitation - but also to more evaporation. In general, this acceleration of the hydrological cycle will result in a wetter world. The question is, how much of this wetness will end up where it is needed?
Precipitation will probably increase in some areas and decline in others. Climate models are still unable to make precise regional predictions. In addition, the hydrological cycle is extremely complex: a change in precipitation may affect surface wetness, reflectivity, and vegetation, which then affect evapo-transpiration and cloud formation, which in turn affect precipitation. Meanwhile, the hydrological system is also responding to other human activities such as deforestation, urbanization, and the over-use of water supplies.
Changing precipitation patterns will affect how much water can be captured. Several models suggest that downpours will become more intense. This would increase floods and runoff while reducing the ability of water to infiltrate the soil. Changes in seasonal patterns may affect the regional distribution of both ground and surface water supplies.
The drier the climate, the more sensitive is the local hydrology. Relatively small changes in temperature and precipitation could cause relatively large changes in runoff. Arid and semi-arid regions will therefore be particularly sensitive to reduced rainfall and to increased evaporation and plant transpiration.
High-latitude regions may see more runoff due to greater precipitation. Runoff would also be affected by a reduction in snowfall, deep snow, and glacier ice, particularly in the spring and summertime when it is traditionally used for hydroelectricity and agriculture. All climate change models show increased wintertime soil moisture in the high northern latitudes, with a reduction of moisture in some areas. Most models produce less soil moisture in summer in northern mid latitudes, including some important grain producing areas; these projections are more consistent for Europe than for North America.
The effects on the tropics are harder to predict. Different climate models produce different results for the future intensity and distribution of tropical rainfall.
Reservoirs and wells would be affected. Changes at the surface would influence the recharging of groundwater supplies and, in the longer term, aquifers. Water quality may also respond to changes in the amount and timing of precipitation.
New patterns of runoff and evaporation will also affect natural ecosystems.Freshwater ecosystems will respond to altered flood regimes and water levels. Changes in water temperatures and in the thermal structure of fresh waters could affect the survival and growth of certain organisms, and the diversity and productivity of ecosystems. Changes in runoff, groundwater flows, and precipitation directly over lakes and streams would affect nutrients and dissolved organic oxygen, and therefore the quality and clarity of the water.
Rising seas could invade coastal freshwater supplies. Coastal aquifers may be damaged by saline intrusion as salty groundwater rises. The movement of the salt-front up estuaries would affect freshwater pumping plants upriver.
Reduced water supplies would place additional stress on people, agriculture, and the environment.Regional water supplies, particularly in developing countries, will come under many stresses in the 21st century. Climate change will exacerbate the stresses caused by pollution and by growing populations and economies. The most vulnerable regions are arid and semi-arid areas, some low-lying coasts, deltas, and small islands.
Conflicts could be sparked by the additional pressures. The links among climate change, water availability, food production, population growth, and economic growth are many and complex. But climate change is likely to add to economic and political tensions, particularly in regions that already have scarce water resources. A number of important water systems are shared by two or more nations, and in several cases there have already been international conflicts.
Improved water resource management can help to reduce vulnerabilities. New supplies must be developed and existing supplies used more efficiently. Long-term management strategies should include: regulations and technologies for directly controlling land and water use, incentives and taxes for indirectly affecting behavior, the construction of new reservoirs and pipelines to boost supplies, and improvements in water-management operations and institutions. Other adaptation measures can include removing levees to maintain flood plains, protecting waterside vegetation, restoring river channels to their natural form, and reducing water pollution.
Climate change is expected to have wide-ranging consequences for human health. Public health depends on sufficient food, safe drinking water, secure shelter, good social conditions, and a suitable environmental and social setting for controlling infectious diseases. All of these factors can be affected by climate.
Any increase in the frequency or intensity of extreme weather events would pose a threat.Heat waves, flooding, storms, and drought can cause deaths and injuries, famine, the displacement of populations, disease outbreaks, and psychological disorders. While scientists are uncertain how climate change will affect storm frequency, they do project that certain regions will experience increased flooding or drought. In addition, coastal flooding is expected to worsen due to sea-level rise unless sea defences are upgraded.
Heat waves are linked to cardiovascular, respiratory, and other diseases. Illness and deaths from these causes could be expected to increase, especially for the elderly. A greater frequency of warm or hot weather and of thermal inversions (a meteorological phenomenon that can delay the dispersal of pollutants) may worsen air quality in many cities. On the other hand, milder winters in temperate climates would probably reduce cold-related deaths in some countries.
By reducing fresh water supplies, climate change may affect water resources and sanitation. This in turn could reduce the water available for drinking and washing. It could also lower the efficiency of local sewer systems, leading to increased concentrations of bacteria and other micro-organisms in raw water supplies. Water scarcity may force people to use poorer quality sources of fresh water, such as rivers, which are often contaminated. All of these factors could result in an increased incidence of diarrhoeal diseases.
Food security may be undermined in vulnerable regions. Local declines in food production would lead to more malnutrition and hunger, with long-term health consequences, particularly for children.
The geographical distribution of species that transmit disease may be altered. In a warmer world, mosquitoes, ticks, and rodents could expand their range to higher latitudes and higher altitudes. Approximately 45% of the world's human population presently live in regions suitable for malaria transmission. Climate change impacts models suggest that the largest changes in the potential for disease transmission will occur at the fringes -- in terms of both latitude and altitude -- of the current malaria risk areas. Generally, people in these border areas will not have developed immunity to the disease. The seasonal transmission and distribution of many other diseases that are transmitted by mosquitoes (dengue, yellow fever) and by ticks (Lyme disease, hantavirus pulmonary syndrome, tick-borne encephalitis) may also be affected by climate change.
There is a long list of other potential health effects. Asthma, allergic disorders, and cardio-respiratory diseases could result from climate-induced changes in the formation and persistence of pollens, spores, and certain pollutants. Changes in the production of both aquatic pathogens and biotoxins may jeopardize the safety of seafood.
People will have to adapt or intervene to minimize these enhanced health risks. Many effective measures are available. The most important, urgent, and cost-effective is to rebuild the public health infrastructure in countries where it has deteriorated in recent years. Many diseases and public health problems that may be exacerbated by climate change can be effectively prevented with adequate financial and human resources. Adaptation strategies can include infectious disease surveillance, sanitation programmes, disaster preparedness, improved water and pollution control, public education directed at personal behaviour, training of researchers and health professionals, and the introduction of protective technologies (such as housing improvements, air conditioning, water purification, and vaccination).
Assessing the potential health effects of climate change involves many uncertainties. Researchers must consider not only future scenarios of climate change but many non-climate factors as well. For example, trends in socio-economic conditions can have a major affect on a population's vulnerability. Clearly, poorer communities will be more vulnerable to the health impacts of climate change than rich ones.
Or page 17, Weather Climate and Health (WMO)
Climate change will have some negative effects on humanity's physical assets. Some of the most valuable infrastructure includes industrial plants and products; equipment for producing and distributing energy; roads, ports, and other transportation facilities; residential and commercial properties; and coastal embankments. While climate change may have important consequences for infrastructure, they are likely to be smaller than those resulting from demographic, technological, and market changes, in good part because of the many opportunities for adaptation.
Industrial, energy, and transport infrastructure may be damaged. Changes in temperature, precipitation, or extreme events can destroy exposed infra-structure or affect productive output. Among the extreme events that may become more frequent or intense in some regions are coastal storm surges, floods, and landslides induced by local downpours, windstorms, rapid snow-melt, tropical cyclones and hurricanes, and drought-induced forest and bush fires.
Some economic activities are particularly vulnerable. In general, the climate sensitivity of the industry, energy, and transportation sectors is relatively low compared to that of agriculture and natural ecosystems. Most susceptible to surprises, sudden changes, and extreme events are agro-industry; the production of hydroelectricity, biomass, and other forms of renewable energy; energy use; construction; some transportation activities; and infrastructure located in coastal zones, on permafrost, or other vulnerable areas.
Rising sea levels could have the most dramatic and direct consequences. Many coastlines are highly developed and contain human settlements, industry, ports, and other infrastructure. Among the most vulnerable are some small island nations, developing countries, and densely populated coasts that currently lack extensive sea and coastal defense systems. Sea-level rise, storm surges, and flooding could force populations to migrate, with additional consequences for infrastructure further in-land.
The property insurance sector is particularly vulnerable to extreme climate events. A greater risk of extreme events due to climate change could lead to higher insurance premiums or the withdrawal of insurance coverage in some vulnerable areas. Changes in climate variability and the risk of extreme events may be hard to detect or predict, making it difficult for insurance companies to adjust their premiums correctly. If such problems lead these firms to insolvency, they may not be able to honor outstanding insurance contracts. This in turn could weaken other economic sectors, such as banking.
Industry would experience many indirect effects . . .Because economic activities are so interconnected, an impact on one sector can affect the entire economy. Industry, energy, and transportation are likely to feel knock-on effects via climate-sensitive resource sectors such as agro-industry and biomass production. Climate-sensitive markets will also send signals, such as a changing energy demand for heating or cooling buildings. The result will be an aggregation of many individual impacts.
. . . as would human settlements. For example, a decline in the productivity of natural resources in rural areas may accelerate rural-to-urban migration, especially in the developing world. Migration in response to chronic crop failures, regional flooding, or drought would put pressure on existing housing, water, food, and health systems.
Settlements stressed by population growth, poverty, industrialization, and environmental degradation are the most vulnerable.Also at risk are large primary coastal cities, squatter camps located in flood plains and on steep hillsides, settlements in forested areas vulnerable to increased seasonal wildfires, and communities that depend on subsistence agriculture or on commercial fishing. In all cases, the poorest people will be the most affected.
Human infrastructure can be protected through well-chosen policies and management strategies. The life cycles for planning and investing in infrastructure are often short enough to allow managers to anticipate future climate change. They could adapt to climate change by replacing capital at the normal pace with more appropriate designs and locations. However, it cannot be assumed that people and organizations will always adopt such adaptation strategies automatically. Governments may need to set policy and regulatory frameworks to encourage private action. They may also need to take direct action to protect certain vulnerable infrastructure. The message, then, is clear: future risks can be reduced if climate change is incorporated into all current planning.
Diversifying the economy can offer additional protection. Developing countries that rely on a limited number of crops or other resources are economically vulnerable to climate change. When combined with improved management practices such as "integrated coastal management", economic diversification can be an important precautionary response. However, these strategies will often encounter resistance. Some of the possible constraints are technological advancement, human resources, finances, cultural and social sensitivities, and political and legal obstacles. The lack of financial and human resources is especially acute for developing countries.
The climate varies naturally on all timescales. Variations can be caused by external forces such as volcanic eruptions or changes in the sun's energy output. They can also result from the internal interactions of the climate system's various components - the atmosphere, oceans, biosphere, ice cover, and land surface. These internal interactions can cause fairly regular fluctuations, such as the El Nino/Southern Oscillation (ENSO) phenomenon, or apparently random changes in climate.
Natural variability often leads to climate extremes and disasters. On timescales of days, months, and years, weather and climate variability can produce heat waves, frosts, floods, droughts, severe storms, and other extremes. A climate extreme is a significant departure from the normal state of the climate system, irrespective of its actual impact on life or the earth's ecology. When a climate extreme has a major adverse impact on human welfare, it is called a climatic disaster. In some parts of the world climatic disasters occur so frequently that they may be considered part of the norm. It is possible that greenhouse gasinduced climate change will alter the frequency, magnitude, and character of both climate extremes and climatic disasters.
Every region of the world experiences recordbreaking climate extremes from time to time. In 1995, for example, summer heatwaves affected both the US Midwest and the Indian subcontinent. More than 700 people died from heat stress in the US; 500 died in northern India when June temperatures soared to 50 degrees Celsius. Earlier that year, river flooding in the Netherlands caused the evacuation of over 200,000 people and almost half a million livestock. It was the worst flooding since the Dutch sea dikes failed in 1953. In the first decades of this century, a trend towards increased drought in the North American Midwest culminated in the "Dust Bowl" decade of the 1930s, after which conditions eased. More recently, annual rainfall over the Sahel zone of northern Africa during nine of the years since 1970 has dropped more than 20% below the average prevailing during this century's first seven decades; those previous 70 years saw only one extreme of this magnitude.
Do today's frequent reports of recordbreaking events mean that climate extremes are becoming more common? According to the Intergovernmental Panel on Climate Change, "there are inadequate data to determine whether consistent changes in climate variability or weather extremes have occurred over the 20th century". There have been some regional trends but "some of these changes have been toward greater variability; some have been toward lower variability". It may simply be that people are much more aware of extreme events because the communications revolution has made news and information so much more widely available than ever before.
Increased human vulnerability is transforming extreme events into more climatic disasters. People in many parts of the world are being forced to live in more exposed and marginal areas. Elsewhere, highvalue property is being developed in highrisk zones. This has been reflected in the severe pounding that the insurance industry has received from a series of "billion dollar" storms since 1987.
In the future, global climate change may significantly affect the frequency, magnitude, and location of extreme events. Any shift in mean climate will almost inevitably affect the frequency of extreme events (see figure). In general, more heatwaves and fewer frosts could be expected, and more intense rainfalls may lead to increased flooding in some regions. However, extreme events last for a relatively short time and are usually a local experience, making it difficult for scientists to predict how these events might respond to climate change. For example, a warming of the tropical oceans would by itself be expected to increase the frequency, and perhaps the severity, of tropical cyclones. But other factors, such as changing winds or storm tracks, might offset this effect at the local level. In any case, growing human vulnerability to climate extremes, combined with the uncertainties of climate change, clearly offers cause for concern.
While extreme events are inherently abrupt and random, the risks they pose can be reduced. Improved preparedness planning is urgently needed in many parts of the world, with or without climate change. Better information, stronger institutions, and new technologies can minimize human and material losses. For example, new buildings can be designed and located in ways that minimize damage from floods and tropical cyclones, while sophisticated irrigation techniques can protect farmers and their crops from droughts.
Scientists cannot state that today's extreme events result from climate change.They simply do not understand the climate system and the effects of greenhouse gas emissions well enough to conclude that particular events are linked to the general problem. (It is possible that in future decades they may look back and realise with the benefit of hindsight that certain events indeed were linked.) Nevertheless, monitoring and studying extreme events, and learning how to predict and cope with them, must be a priority. Of all the effects of climate variability in the decades to come, extreme events are likely to be of greatest consequence for human well-being.
TheFirst World Climate Conference recognized climate change as a serious problem in 1979. This scientific gathering explored how climate change might affect human activities. It issued a declaration calling on the world’s governments “to foresee and prevent potential man-made changes in climate that might be adverse to the well-being of humanity”. It also endorsed plans to establish a World Climate Programme (WCP) under the joint responsibility of the World Meteorological Organization (WMO), the United Nations Environment Programme (UNEP), and the International Council of Scientific Unions (ICSU).
A number of intergovernmental conferences focusing on climate change were held in the late 1980s and early 1990s. Together with increasing scientific evidence, these conferences helped to raise international concern about the issue. Participants included government policy-makers, scientists, and environmentalists. The meetings addressed both scientific and policy issues and called for global action. The key events were the Villach Conference (October 1985), the Toronto Conference (June 1988), the Ottawa Conference (February 1989), the Tata Conference (February 1989), the Hague Conference and Declaration (March 1989), the Noordwijk Ministerial Conference (November 1989), the Cairo Compact (December 1989), the Bergen Conference (May 1990), and the Second World Climate Conference (November 1990).
The Intergovernmental Panel on Climate Change (IPCC) released its First Assessment Report in 1990.Established in 1988 by UNEP and WMO, the Panel was given a mandate to assess the state of existing knowledge about the climate system and climate change; the environmental, economic, and social impacts of climate change; and the possible response strategies. Approved after a painstaking peer review process, the Report confirmed the scientific evidence for climate change. This had a powerful effect on both policy-makers and the general public and provided the basis for negotiations on the Climate Change Convention.
In December 1990, the UN General Assembly approved the start of treaty negotiations. The Intergovernmental Negotiating Committee for a Framework Convention on Climate Change (INC/FCCC) met for five sessions between February 1991 and May 1992. Facing a strict deadline – the June 1992 Rio “Earth Summit” – negotiators from 150 countries finalized the Convention in just 15 months. It was adopted in New York on 9 May 1992.
The 1992 UN Framework Convention on Climate Change was signed by 154 states (plus the EC) at Rio de Janeiro.Twenty years after the 1972 Stockholm Declaration first laid the foundations of contemporary environmental policy, the Earth Summit became the largest-ever gathering of Heads of State. Other agreements adopted at Rio were the Rio Declaration, Agenda 21, the Convention on Biological Diversity, and Forest Principles.
The Convention entered into force on 21 March 1994. This was 90 days after the receipt of the 50th instrument of ratification (after signing a convention a state must also ratify). The next critical date was 21 September when developed country Parties started submitting national communications describing their climate change strategies. Meanwhile, the INC continued its preparatory work, meeting for another six sessions to discuss matters relating to commitments, arrangements for the financial mechanism, technical and financial support to developing countries, and procedural and institutional matters. The INC was dissolved after its 11th and final session in February 1995, and the Conference of the Parties (COP) became the Convention’s ultimate authority.
The Conference of the Parties held its first session in Berlin from 28 March - 7 April 1995. Delegates from 117 Parties and 53 Observer States participated in COP-1, as did over 2,000 observers and journalists. They agreed that the commitments contained in the Convention for developed countries were inadequate and launched the “Berlin Mandate” talks on additional commitments. They also reviewed the first round of national communications and finalized much of the institutional and financial machinery needed to support action under the Convention in the years to come. COP-2 was held at the Palais des Nations in Geneva from 8-19 June 1996.
The IPCC adopted its Second Assessment Report in December 1995. Published in time for COP-2, the Second Assessment Report was written and reviewed by some 2,000 scientists and experts world-wide. It was soon widely known for concluding that “the balance of evidence suggests that there is a discernible human influence on global climate.” However, the Report did much more, for example confirming the availability of so-called no-regrets options and other cost-effective strategies for combating climate change. The IPCC will produce a series of technical papers and special reports before publishing its Third Assessment Report in 2001.
The Kyoto Protocol was adopted at COP-3 in December 1997. Some 10,000 delegates, observers, and journalists participated in this high-profile event from 1 - 11 December. Under the Protocol, which was adopted by consensus, industrialized countries have a legally binding commitment to reduce their collective greenhouses gas emissions by at least 5% compared to 1990 levels by the period 2008-2012. The Protocol will enter into force 90 days after it has been ratified by at least 55 Parties to the Convention, including developed countries representing at least 55% of this group’s total 1990 CO2 emissions.
The 1998 Buenos Aires conference adopted a two-year Plan of Action. Held from 2-13 November, COP-4 set deadlines for finalizing the outstanding details of the Kyoto Protocol so that the agreement will be fully operational when it enters into force sometime after the year 2000. In addition to the Protocol's "mechanisms", the Plan of Action addresses work on compliance issues and on policies and measures. COP-5 will be held from 15 October - 5 November in Bonn, and COP-6 will be held in late 2000.
The United Nations Framework Convention on Climate Convention is the centrepiece of global efforts to combat global warming. Adopted in 1992 at the Rio Earth Summit, its ultimate objective is the “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic [man-made] interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.”
The Convention sets out some guiding principles. The precautionary principle says that the lack of full scientific certainty should not be used as an excuse to postpone action when there is a threat of serious or irreversible damage. The principle of the "common but differentiated responsibilities" of states assigns the lead in combating climate change to developed countries. Other principles deal with the special needs of developing countries and the importance of promoting sustainable development.
Both developed and developing countries accept a number of general commitments. All Parties will develop and submit “national communications” containing inventories of greenhouse gas emissions by source and greenhouse gas removals by “sinks”. They will adopt national programmes for mitigating climate change and develop strategies for adapting to its impacts. They will also promote technology transfer and the sustainable management, conservation, and enhancement of greenhouse gas sinks and “reservoirs” (such as forests and oceans). In addition, the Parties will take climate change into account in their relevant social, economic, and environmental policies; cooperate in scientific, technical, and educational matters; and promote education, public awareness, and the exchange of information related to climate change.
Industrialized countries undertake several specific commitments. Most members of the Organization for Economic Cooperation and Development (OECD) plus the states of Central and Eastern Europe –known collectively as Annex I countries – are committed to adopting policies and measures aimed at returning their greenhouse gas emissions to 1990 levels by the year 2000. They must also submit national communications on a regular basis detailing their climate change strategies. Several states may together adopt a joint emissions target. OECD countries should take the strongest measures, while the countries in transition to a market economy are granted a certain degree of flexibility.
The richest countries shall provide "new and additional financial resources" and facilitate technology transfer. These so-called Annex II countries (essentially the OECD) will fund the “agreed full cost” incurred by developing countries for submitting their national communications. These funds must be "new and additional" rather than redirected from existing developmental aid funds. Annex II Parties will also help finance certain other Convention-related projects, and they will promote and finance the transfer of, or access to, environmentally sound technologies, particularly for developing country Parties. The Convention recognizes that the extent to which developing country Parties implement their commitments will depend on financial and technical assistance from the developed countries.
The supreme body of the Convention is the Conference of the Parties (COP). The COP comprises all the states that have ratified the Convention (over 175 by May 1999). It held its first meeting (COP-1) in Berlin in 1995 and will continue to meet on a yearly basis unless the Parties decide otherwise. The COP’s role is to promote and review the implementation of the Convention. It will periodically review existing commitments in light of the Convention’s objective, new scientific findings, and the effectiveness of national climate change programmes. The COP can adopt new commitments through amendments and protocols; in December 1997 it adopted the Kyoto Protocol containing stronger emissions-related commitments for developed countries in the post-2000 period.
The Convention also establishes two subsidiary bodies. The Subsidiary Body for Scientific and Technological Advice (SBSTA) provides the COP with timely information and advice on scientific and technological matters relating to the Convention. The Subsidiary Body for Implementation (SBI) helps with the assessment and review of the Convention’s implementation. Two additional bodies were established by COP-1: the Ad hoc Group on the Berlin Mandate (AGBM), which concluded its work in Kyoto in December 1997, and the Ad hoc Group on Article 13 (AG13).
A financial mechanism provides funds on a grant or concessional basis. The Convention states that this mechanism shall be guided by, and be accountable to, the Conference of the Parties, which shall decide on its policies, programme priorities, and eligibility criteria. There should be an equitable and balanced representation of all Parties within a transparent system of governance. The operation of the financial mechanism may be entrusted to one or more international entities. The Convention assigns this role to the Global Environment Facility (GEF) on an interim basis; in 1999 the COP decided to entrust the GEF with this responsibility on an on-going basis and to review the financial mechanism every four years.
The COP and its subsidiary bodies are serviced by a secretariat. The interim secretariat that functioned during the negotiation of the Convention became the permanent secretariat in January 1996. The secretariat arranges for sessions of the COP and its subsidiary bodies, drafts official documents, services meetings, compiles and transmits reports submitted to it, facilitates assistance to Parties for the compilation and communication of information, coordinates with secretariats of other relevant international bodies, and reports on its activities to the COP.
The Conference of the Parties is the “supreme body” of the Climate Change Convention.
The vast majority of the world’s states are members – over 175 as of May 1999. The Convention enters into force for a state 90 days after that state ratifies it. The COP held its first session in 1995 and will continue to meet annually unless decided otherwise. (The various subsidiary bodies that advise and support the COP meet more frequently.)
The COP must promote and review the Convention’s implementation. The Convention states that the COP must periodically examine the obligations of the Parties and the institutional arrangements under the Convention. It should do this in light of the Convention's objective, the experience gained in its implementation, and the current state of scientific knowledge.
Progress is reviewed largely through the exchange of information. The COP assesses information about policies and emissions that the Parties share with each other through their “national communications.” It also promotes and guides the development and periodic refinement of comparable methodologies, which are needed for quantifying net greenhouse gas emissions and evaluating the effectiveness of measures to limit them. Based on the information available, the COP assesses the Parties’ efforts to meet their treaty commitments and adopts and publishes regular reports on the Convention's implementation.
Mobilizing financial resources is vital for helping developing countries carry out their obligations.They need support so that they can submit their national communications, adapt to the adverse effects of climate change, and obtain environmentally sound technologies. The COP therefore oversees the provision of new and additional resources by developed countries.
The COP is also responsible for keeping the entire process on track. In addition to the two subsidiary bodies established under the Convention – the Subsidiary Body for Implementation (SBI) and the Subsidiary Body for Scientific and Technological Advice (SBSTA) – the COP can establish new ones to help it with its work, as it did at its first session (see below). The COP reviews reports from these bodies and guides them. It must also agree and adopt, by consensus, rules of procedure and financial rules for itself and the subsidiary bodies (as of early 1999 the rules of procedures had not been adopted and, with the exception of the rule on voting, are being “applied”).
The Conference of the Parties held its first session (known as COP-1) in Berlin.From 28 March -7 April 1995, the historic city of Berlin was the site of the first global climate change meeting attended by ministers since the 1992 Rio "Earth Summit". The Convention required COP-1 to review whether the commitment by developed countries to take measures aimed at returning their emissions to 1990 levels by the year 2000 was adequate for meeting the Convention’s objective. The Parties agreed that new commitments were indeed needed for the post-2000 period. They adopted the "Berlin Mandate" and established a new subsidiary body, the Ad hoc Group on the Berlin Mandate (AGBM), to draft “a protocol or another legal instrument” for adoption at COP-3 in 1997. The Berlin meeting also started the review process to consider the implementation of the Convention by discussing a compilation and synthesis of the first 15 national communications submitted by developed countries.
The second session of the COP took stock of progress on the Berlin Mandate. Ministers stressed the need to accelerate talks on how to strengthen the Climate Change Convention. Their Geneva Declaration endorsed the 1995 Second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) "as currently the most comprehensive and authoritative assessment of the science of climate change, its impacts and response options now available." Held at the Palais des Nations in Geneva from 8-19 July 1996, COP-2 also considered the review process for national communications and decided on the contents of the first national communications that developing countries were to start submitting in April 1997.
The third session of the Conference of the Parties adopted the Kyoto Protocol. The Parties met in Kyoto, Japan from 1-12 December 1997 to conclude the Berlin Mandate process. The Protocol they crafted is a legally binding agreement under which industrialized countries are to reduce their collective emissions of six greenhouse gases by 5.2% by 2008-12, calculated as an average over these five years. To help Parties reduce emissions cost-effectively while promoting sustainable development, the Protocol includes three "mechanisms": the clean development mechanism, an emissions trading regime, and joint implementation. COP-3 also considered funding, technology transfer, and the review of information under the Convention.
COP-4 adopted a two-year Plan of Action to finalize the Protocol's outstanding details. To ensure that the agreement will be fully operational when it enters into force sometime after the year 2000, governments agreed to a COP-6 deadline for deciding just how its "mechanisms" will function. The Plan also addresses compliance issues and policies and measures and Convention-related issues such as the transfer of climate-friendly technologies to developing countries and the special needs and concerns of countries affected by global warming and by the economic implications of response measures. COP-4 was held in Buenos Aires from 2 -13 November 1998. COP-5 will take place in Bonn from 25 October - 5 November 1999, and COP-6 will be held in late 2000 or early 2001.
The sharing of information by governments is central to how the Climate Change Convention works. The Convention requires its members to submit "national communications" to the Conference of the Parties (COP) on a regular basis. This information about national greenhouse gas emissions, international cooperation, and national activities is reviewed periodically so that the Parties can track the Convention's effectiveness and draw lessons for future national and global action.
National communications describe what a Party is doing to implement the Convention. Relevant issues could include policies for limiting greenhouse gas emissions and adapting to climate change, climate research, monitoring of climate impacts on ecosystems and agriculture, voluntary action by industry,
integration of climate change concerns into long-term planning, coastal-zone management, disaster preparedness, training, and public awareness.
"National inventories" of greenhouse gas emissions and removals are updated regularly. This data details the sources of emissions for each gas, the "sinks" (such as forests) that remove greenhouse gases from the atmosphere, and the quantities involved. The information should be collected using agreed methodologies to ensure that national data are consistent and comparable and can be incorporated into global data sets.
Developed countries are providing additional details on their efforts to limit emissions. These so-called Annex I Parties must describe the policies and measures they are adopting in an effort to return their greenhouse gas emissions to 1990 levels by the year 2000. They also provide projections through the year 2000 of how these policies will affect emissions and sinks. Developed countries were committed to making their first submissions no later than six months after becoming a Party. These initial communications were single documents, normally with annexes and a brief executive summary. The majority of developed countries have already submitted their second communications, which were due starting April 1997.
National communications from developed countries are subjected to a three-step review process. The first step is to compile and synthesize the information contained in all the submissions. A team of experts from developed and developing countries and from international organizations is assembled by the Convention's secretariat for each review. The first review of the second national communications in late 1997 considered submissions from 18 Parties, while the second review in late 1998 was based on 26.
The second step is the in-depth review of individual communications. Based in part on on-site visits, the experts conduct a comprehensive technical assessment of each submission. In addition to providing a more rigorous analysis, this approach has the benefit of building capacity in developing countries through the participation of their experts. Together with the information compiled in step one, the in-depth reviews are summed up in a "compilation and synthesis" report that is prepared for each session of the Conference of the Parties.
The process concludes with an overall review by the COP. This third step focuses on the big picture of how the Convention is influencing international action on climate change.
The 1998 review revealed that greenhouse gas emissions in the richest (essentially OECD) countries have risen by 3.5% since 1990. Meanwhile, emissions in the economies in transition (Central/Eastern Europe and the former Soviet Union) have declined by 28% due to economic restructuring. As a result, overall emissions from developed countries have declined by 4.6% since 1990. Comparing data from the 1990 inventories with projections for the years 2000 and 2010 suggests that emissions will be some 3% lower in 2000. They will rise by 8% by 2010 if additional control measures are not adopted. (For details on CO2 see Table 4 on Sheet 30.)
Carbon dioxide accounted for 82% of total greenhouse gas emissions from developed countries in 1995. The 1998 review confirmed that fuel combustion is the most important source of CO2, accounting for 96% of 1995's emissions. Since the 36 Parties included in this review account for a major part of 1990 global carbon dioxide emissions, this seems to confirm carbon dioxide as the most important greenhouse gas resulting from human activities. Governments generally believe that their data on carbon dioxide have a high confidence level (with the exception of land-use change and the forestry sector).
Methane and nitrous oxide accounted for 12% and 4% of total emissions, respectively.Confidence levels for data on these gases are medium to low, depending on the sector. For methane, all but five Parties project that their emissions will decline or stabilize. Nitrous oxide trends will also decline or stabilize in the majority of developed countries. These countries' combined emissions of HFCs, PFCs, and SF6 represented 2% of the 1995 total.
Developed countries are exploring a wide range of climate change policies and measures. The policies governments choose are generally dictated by national circumstances such as political structure and the overall economic situation. Many are "no regrets" measures that have environmental or economic benefits
while responding to climate change concerns. In addition to regulatory and economic instruments, Parties are promoting voluntary agreements with industry and public authorities. Other measures involve research and development, and information and education.
Specific measures are being used for most of the major economic sectors. Policies for the energy sector (the largest source of emissions for many countries) include switching to low-or no-carbon fuels, energy market liberalization, and removing subsidies on coal. Industry-related policies include voluntary arrangements, efficiency standards, financial incentives, and liberalized energy prices. The focus in the residential, commercial, and institutional sector is on energy-efficiency standards for new buildings, higher energy prices, and public information campaigns. Agricultural measures include reducing herd sizes and fertilizer use and improving waste management. While most governments project an expansion of the transportation sector, relatively few measures for controlling its emissions were reported.
Developing countries started making their initial submissions in 1997. Their due date is 36 months after becoming a Party or having access to the necessary financial resources. Parties that are least developed countries may make their initial communications at their discretion. In 1996, the COP adopted the guidelines and format that developing countries should use for these initial communications. It has also emphasized to the Global Environmental Facility the need to expedite the approval and disbursement of financial resources so that developing countries can make their submissions on time.
The frequency of future communications by all Parties will be determined by the COP. In 1998, the COP asked developed countries to submit their third national communications by 30 November 2001. The COP will also continue to work towards improving the quality and usefulness of the national communications. In particular, many methodological and practical problems concerning data collection and the calculation of inventories must still be resolved. The Intergovernmental Panel on Climate Change (IPCC) is therefore working to refine the methodologies used for national communications.
The Kyoto Protocol to the United Nations Framework Convention on Climate Change strengthens the international response to climate change.Adopted by consensus at the third session of the Conference of the Parties (COP-3) in December 1997, it contains legally binding emissions targets for Annex I (developed) countries for the post-2000 period. By arresting and reversing the upward trend in greenhouse gas emissions that started in these countries 150 years ago, the Protocol promises to move the international community one step closer to achieving the Convention’s ultimate objective of preventing “dangerous anthropogenic [man-made] interference with the climate system”.
The developed countries commit themselves to reducing their collective emissions of six key greenhouse gases by at least 5%.This group target will be achieved through cuts of 8% by Switzerland, most Central and East European states, and the European Union (the EU will meet its target by distributing different rates to its member states); 7% by the US; and 6% by Canada, Hungary, Japan, and Poland. Russia, New Zealand, and Ukraine are to stabilize their emissions, while Norway may increase emissions by up to 1%, Australia by up to 8%, and Iceland 10%. The six gases are to be combined in a “basket”, with reductions in individual gases translated into “CO2 equivalents” that are then added up to produce a single figure.
Each country’s emissions target must be achieved by the period 2008-2012. It will be calculated as an average over the five years. “Demonstrable progress” must be made by 2005. Cuts in the three most important gases – carbon dioxide (CO2), methane (CH4), and nitrous oxide (N20) - will be measured against a base year of 1990 (with exceptions for some countries with economies in transition). Cuts in three long-lived industrial gases – hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6) - can be measured against either a 1990 or 1995 baseline. (A major group of industrial gases, chlorofluorocarbons, or CFCs, are dealt with under the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer.)
Actual emissions reductions will be much larger than 5%.Compared to emissions levels projected for the year 2000, the richest industrialized countries (OECD members) will need to reduce their collective output by about 10%. This is because many of these countries will not succeed in meeting their earlier non-binding aim of returning emissions to 1990 levels by the year 2000, and their emissions have in fact risen since 1990. While the countries with economies in transition have experienced falling emissions since 1990, this trend is now reversing. Therefore, for the developed countries as a whole, the nominal 5% Protocol target represents an actual 20% cut when compared to the emissions levels that would be projected for 2010 if no emissions-control measures were adopted.
Countries will have a certain degree of flexibility in how they make and measure their emissions reductions. In particular, an international "emissions trading" regime will be established allowing industrialized countries to buy and sell emissions credits amongst themselves. They will also be able to acquire “emission reduction units” by financing certain kinds of projects in other developed countries. In addition, a "clean development mechanism" will enable industrialized countries to finance emissions-reduction projects in developing countries and to receive credit for doing so. The operational guidelines for these various schemes are being elaborated under a two-year Plan of Action that is to conclude by COP-6 in late 2000.
They will pursue emissions cuts in a wide range of economic sectors. The Protocol encourages governments to cooperate with one another, improve energy efficiency, reform the energy and transportation sectors, promote renewable forms of energy, phase out inappropriate fiscal measures and market imperfections, limit methane emissions from waste management and energy systems, and protect forests and other carbon "sinks". The measurement of changes in net emissions (calculated as emissions minus removals of CO2) from forests is methodologically complex and still needs to be clarified.
The Protocol will advance the implementation of existing commitments by all countries. Under the Convention, both developed and developing countries agree to take measures to limit emissions and promote adaptation to future climate change impacts; submit information on their national climate change programmes and inventories; promote technology transfer; cooperate on scientific and technical research; and promote public awareness, education, and training. The Protocol also reiterates the need to provide “new and additional” financial resources to meet the “agreed full costs” incurred by developing countries in carrying out these commitments.
The Conference of the Parties (COP) of the Convention will also serve as the meeting of the Parties (MOP) for the Protocol. This structure is expected to reduce costs and facilitate the management of the intergovernmental process. Parties to the Convention that are not Parties to the Protocol will be able to participate in Protocol-related meetings as observers.
The new agreement will be periodically reviewed. The Parties will take “appropriate action” on the basis of the best available scientific, technical, and socio-economic information. The first review will take place at the second COP session serving the Protocol. Talks on commitments for the post-2012 period must start by 2005.
The Protocol was opened for signature for one year starting 16 March 1998. It will enter into force 90 days after it has been ratified by at least 55 Parties to the Convention, including developed countries representing at least 55% of the total 1990 carbon dioxide emissions from this group. In the meantime, governments will continue to carry out their commitments under the Climate Change Convention. They will also work on many practical issues relating to the Protocol and its future implementation at their regular COP and subsidiary body meetings.
Most important human activities emit greenhouse gases (GHGs). Emissions started to rise dramatically in the 1800s due to the Industrial Revolution and changes in land use. Many greenhouse gas-emitting activities are now essential to the global economy and form a fundamental part of modern life.
Carbon dioxide from the burning of fossil fuels is the largest single source of greenhouse gas emissions from human activities. The supply and use of fossil fuels accounts for about three quarters of mankind's carbon dioxide (CO2) emissions (equal to some 5.9 billion metric tonnes of carbon in 1992), one-fifth of the methane (CH4), and a significant quantity of nitrous oxide (N2O). It also produces nitrogen oxides (NOx), hydrocarbons (HCs), and carbon monoxide (CO), which, though not greenhouse gases themselves, influence chemical cycles in the atmosphere that create or destroy other greenhouse gases, such as tropospheric ozone. Meanwhile, fuel-related releases of sulphate aerosols are temporarily masking part of the warming effect of greenhouse gases.
Most emissions associated with energy use result when fossil fuels are burned. Oil, natural gas, and coal (which emits the most carbon per unit of energy supplied) furnish most of the energy used to produce electricity, run automobiles, heat houses, and power factories. If fuel burned completely, the only by-product containing carbon would be carbon dioxide. But combustion is often incomplete, so carbon monoxide and other hydrocarbons are also produced. Nitrous oxide and other nitrogen oxides are produced because fuel combustion causes nitrogen in the fuel or air to combine with oxygen in the air. Sulphur oxides (SOx) result when sulphur (primarily from coal and heavy fuel oil) combines with oxygen; the resulting sulphate aerosols have a cooling effect on the atmosphere.
Extracting, processing, transporting, and distributing fossil fuels also releases greenhouse gases. These releases can be deliberate, as when natural gas is flared or vented from oil wells, emitting mostly carbon dioxide and methane, respectively. They can also result from accidents, poor maintenance, and small leaks in well heads, pipe fittings, and pipelines. Methane occurring naturally in coal seams as pockets of gas or "dissolved" in the coal itself is released when coal is mined or pulverized. Hydrocarbons enter the atmosphere as a result of oil spills from tanker ships or small losses during the routine fueling of motor vehicles.
Deforestation is the second largest source of carbon dioxide. When forests are cleared for agriculture or development, most of the carbon in the burned or decomposing trees escapes to the atmosphere. However, when new forests are planted the growing trees absorb carbon dioxide, removing it from the atmosphere. Recent net deforestation has occurred mainly in the tropics. There is a great deal of scientific uncertainty about emissions from deforestation, but it is estimated that from 600 million to 2.6 billion tonnes of carbon are released globally every year.
Producing lime (calcium oxide) to make cement accounts for 2.5% of CO2 emissions from industrial sources. Like the CO2 emitted from fossil fuels, the carbon dioxide released during cement production is derived from limestone and is thus of fossil origin, primarily sea shells and other biomass buried in ancient ocean sediments.
Domesticated animals emit methane. The second-most important greenhouse gas after carbon dioxide, methane is produced by cattle, dairy cows, buffalo, goats, sheep, camels, pigs, and horses. Most livestock-related methane emissions are produced by "enteric fermentation" of food by bacteria and other microbes in the animals' digestive tracts; another source is the decomposition of animal manure. Livestock account for about one-quarter of the methane emissions from human activities, totalling some 100 million tonnes a year.
Rice cultivation also releases methane . . . "Wetland" or "paddy" rice farming produces roughly one-fifth to one-quarter of global methane emissions from human activities. Accounting for over 90 percent of all rice production, wetland rice is grown in fields that are flooded or irrigated for much of the growing season. Bacteria and other micro-organisms in the soil of the flooded rice paddy decompose organic matter and produce methane.
. . . as does the disposal and treatment of garbage and human wastes. When garbage is buried in a landfill, it sooner or later undergoes anaerobic (oxygen-free) decomposition and emits methane (and some carbon dioxide). Unless the gas is captured and used as a fuel, the methane eventually escapes to the atmosphere. This source of methane is more common near cities, where garbage from many homes is brought to a central landfill, than in rural areas where garbage is typically burned or left to decompose in the open air. Methane is also emitted when human waste (sewage) is treated anaerobically, for example in anaerobic ponds or lagoons.
Fertilizer use increases nitrous oxide emissions.The nitrogen contained in many fertilizers enhances the natural processes of nitrification and denitrification that are carried out by bacteria and other microbes in the soil. These processes convert some nitrogen into nitrous oxide. The amount of N2O emitted for each unit of nitrogen applied to the soil depends on the type and amount of fertilizer, soil conditions, and climate - a complex equation that is not fully understood.
Industry has created a number of long-lived and potent greenhouse gases for specialized uses.Developed in the 1920s, chlorofluorocarbons (CFCs) have been used as propellants in aerosol cans, in the manufacture of plastic foams for cushions and other products, in the cooling coils of refrigerators and air conditioners, as fire extinguishing materials, and as solvents for cleaning. Thanks to the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer, atmospheric concentrations of many CFCs are stablizing and expected to decline over the coming decades. Other halocarbons that are being used as ozone-safe replacements for CFCs -- notably hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs) -- contribute to global warming and so are targeted for reduction under the 1997 Kyoto Protocol. The Protocol also targets sulphur hexafluoride (SF6), used as an electric insulator, heat conductor, and freezing agent; molecule for molecule, its global warming potential is thought to be 23,900 times greater than that of carbon dioxide
Climate change will have economic consequences.The damage it causes plus the measures people take to adapt to a new climate regime will impose quantifiable market costs as well as non-quantifiable, non-market costs. The fact that some important types of damages cannot be easily monetized makes current damage estimates highly uncertain.
Damages will be unevenly distributed and sometimes irreversible.Although developed countries are responsible for more than two thirds of historical greenhouse gas emissions and approximately 75% of current annual emissions, their strong economies and institutions leave them better positioned than other countries to cope with changes in climate. The annual costs to developed countries of a world with twice the pre-industrial levels of carbon dioxide could equal 13% of their aggregate gross domestic product (GDP). The estimated costs for developing countries are 29% of GDP. Again, it must be emphasized that these estimates include only readily monetized damages and thus understate the likely costs. Some studies have created a "vulnerability index" showing that developing countries are, on average, about twice as vulnerable to the negative impacts of climate change as are developed countries; small island developing countries are about three times as vulnerable.
Policies for minimizing risks by reducing greenhouse gas emissions will also come with a price-tag.Estimates of how much such policies will cost vary widely. For example, cost estimates for stabilizing emissions from the developed countries vary from 0.5% of GDP (that is, a net savings of US$ 60 billion) to +2% of GDP (equal to a net loss of US$ 240 billion). The costs (and potential benefits) of adaptation measures are less well understood. Nevertheless, it seems that for both emissions reduction and adaptation, policymakers can often seek to minimize climate change damage while actually benefiting their national economies.
While some damage from human-induced climate change seems inevitable, policymakers can try to limit the risks. The earth's climate has periodically warmed and cooled during natural cycles that have lasted from decades to millennia. The climate will continue to vary due to these cycles and to the human-enhanced greenhouse effect. The risks posed by rapid climate change due to human action, however, are qualitatively different than those posed by the climate variations that humanity has experienced since the start of civilization. The Climate Change Convention does not seek to avoid all future human-induced climate change, but rather to minimize it and slow the rate of change to ensure that ecosystems and human societies can adapt.
Climate change policies should be viewed as an integral part of sustainable development. Actions to address climate change can promote both socio-economic development and environmental protection (such as reduced urban smog). Climate change strategies should be integrated into national development plans for all economic sectors.
Early action to limit the risks of climate change can have multiple benefits. Many researchers believe it will be possible to reduce climate change damages and adaptation costs while generating economic benefits, such as more cost-effective energy systems and greater technological innovation. Some climate change policies can also bring local and regional environmental benefits, such as reductions in air pollution and increased protection for forests and thus biodiversity. The scientific, technical, and socio-economic literature shows that such "no regrets" opportunities are available in most countries. It also suggests that the risk of net damage, a concern for risk aversion, and the precautionary principle together provide a rationale for actions that go beyond "no regrets" - that is, for actions to reduce emissions that do indeed have net costs beyond climate change benefits.
Policymakers should not overlook the importance of equity. Choosing policies that are both cost-efficient and fair is not easy. Traditional economics rigorously explores how to formulate flexible and cost-effective policies; it has less to say about equity. Because countries differ considerably in their vulnerability to climate change, the costs of damage and adaptation will vary widely unless special efforts are made to redistribute them. Policymakers can pursue equitable solutions by promoting capacity building in poorer countries and reaching collective decisions in a credible and transparent manner. They could also develop financial and institutional mechanisms for sharing risks among countries.
The fact that some climate change impacts will not be felt for many decades also raises the issue of intergenerational equity. Future generations are not able to influence directly the choice of policies made today. What's more, it might not be possible to compensate them for any negative effects on their well-being. This concern should be factored into current policies.
To be effective, policies will require support from the public and from key interest groups.Governments cannot act alone to cut emissions - individuals, communities, and businesses must also cooperate. Education and public information is vital. For example, increased energy consciousness would encourage people to adopt any number of minor changes in their lifestyles, such as riding public transport, using more efficient lighting and appliances, and re-using materials to reduce the need for exploiting natural resources. Local authorities could start restructuring communities to minimize commuting distances by placing homes closer to shops and offices; they could also introduce standards that encourage building designs that take maximum advantage of sunlight and solar heating. Many other changes in the high-consumption lifestyles of the rich countries are also possible.
Cooperation is also essential at the international level.There are different views on whether or not specific policies and measures should be coordinated globally, proponents arguing that coordination ensures fairness and a "level playing field" for business, opponents believing that national flexibility is more cost-effective. But the need for internationally-agreed targets and timetables for emissions reductions and for financial and technological cooperation is more universally accepted. Policymakers must therefore be sensitive to both national conditions and to international trends and concerns.
The prudent response to climate change is to adopt a portfolio of actions aimed at mitigation, adaptation, and research.The economic literature suggests that the optimal policy mix will necessarily differ among countries and over time. The challenge is not for all countries to agree on what is the single best policy and to maintain it for the next 100 years. Rather, each country should select a prudent strategy and adjust it over time in light of new information and changing circumstances. By constructing a balanced portfolio of policy options aimed at reducing emissions, adapting to climate change, and improving the knowledge base, national policymakers can reduce the risks of rapid climate change while promoting sustainable development.
The costs of climate change policies can be minimized through “no regrets” strategies.Such strategies make economic and environmental sense whether or not the world is moving towards rapid climate change. Despite their many differences, economists do broadly agree that energy efficiency gains of 10-30% above baseline trends can be achieved over the next two or three decades at zero net cost or even with net gains. A substantial range of technically feasible and cost-effective policies and measures for reducing emissions are available today. For example, raising energy efficiency not only reduces greenhouse gas emissions but can also make industries and countries more competitive in international markets. While no-regrets policies are certainly justified, the precautionary principle and the level of net damage expected from climate change justify adopting policies that go beyond no regrets.
Although immediate action may sometimes seem more expensive than waiting, delays could lead to greater risks and therefore greater long-term costs.Governments can choose whether to phase-in emissions cuts slowly or rapidly. This choice must balance the economic costs of early actions (including the risk of prematurely retiring some still usable capital stock) against the corresponding costs of delay. One risk of delay is that it would “lock-in” the currently available models of high-emissions capital equipment for many years to come; if people then become convinced of the need for more rapid emissions reductions, these investments would have to be prematurely retired at a large cost. An earlier push to control emissions would increase the long-term flexibility of how humanity works toward stabilizing atmospheric concentrations of greenhouse gases.
Many variables need to be considered in the cost equation.The internationally-agreed timetables and targets for emissions reductions, global population and economic trends, and the development of new technologies will all play a role. Policymakers must also heed the rate of capital replacement (which relates to the natural lifetime of equipment), the range of discount rates that economists use for putting a current value on future benefits (which affects investment decisions), and the possible actions of industry and consumers in response to climate change and related policies.
Many cost-effective policies involve sending the appropriate economic and regulatory signals to national markets.Policies to reduce price distortions and subsidies can increase the efficiency of energy, transport, agricultural, and other markets. Consistent and appropriate signals will encourage research and give producers and consumers the information they need to adapt to future constraints on greenhouse gas emissions. For example, by adopting policies and measures early enough to allow enterprises to replace their capital stocks at the end of their natural economic lifetimes, the costs of adaptation and mitigation will be much lower than if companies are forced to prematurely retire their capital. Some of the greatest benefits of climate policies may be realized in developing countries that are experiencing rapid economic growth and in countries with economies in transition to a market economy.
Economic incentives can be used to influence investors and consumers. If they are market-based, incentives can often be more flexible and efficient than regulatory policies alone. For example, deposit-refund systems can encourage people to trade-in their cars and appliances for more energy-efficient models. Technology and performance standards can reward manufacturers for selling climate-friendly goods, or penalize those who do not. Targeted subsidies, voluntary agreements linked to appropriate targets, and direct government investment can also be cost-effective in shaping the behavior of both consumers and producers.
Introducing or removing taxes or subsidies can incorporate climate change concerns into prices.For example, a tax on the carbon content of oil, coal, and gas would discourage fossil-fuel use and so reduce carbon dioxide emissions. Carbon taxes have already been tried by a number of industrialized countries. Many economists believe that carbon taxes could achieve reductions in CO2 emissions at minimum cost; however, because taxes give individuals and companies the flexibility to choose how to respond, they would be less effective at ensuring that a prescribed emissions level is reached. To be effective, the tax must be well designed and administered. A number of economic studies show that if such taxes are revenue neutral and replace taxes that inhibit investment and employment, they can result in net economic gains. Although such taxes tend to be somewhat regressive, requiring poorer households to pay a higher share of their income on energy bills than rich ones, other taxes and transfers can be adjusted to offset this negative impact.
Tradable emissions permits could also offer a cost-efficient and market-driven approach. This is how permits can work: A government must determine how many tonnes of a particular gas may be emitted each year. It then divides this quantity up into a number of tradable emissions entitlements – measured, perhaps, in CO2-equivalent tonnes – and allocates or sells them to individual firms. This gives each firm a quota of greenhouse gases that it can emit. Then the market takes over. Those polluters that can reduce their emissions relatively cheaply may find it profitable to do so and then sell their permits to other firms. Those that find it expensive to cut emissions may find it attractive to buy extra permits. Tradable emissions permits are already used in the US for certain non-greenhouse gas pollutants. The 1997 Kyoto Protocol contains provisions for the international trading of permits for greenhouse gas emissions amongst developed countries; the details of this scheme must still be elaborated.