- Introduction : the design climate policies

- The economist as a benevolent dictator

- The economist arguing for conflictual solutions

- The (too much ?) realistic economist

Introduction

Precautionnary principle. « When there are threats of serious and irreversible damage, lack of

scientific certainty should not be used as a reason for postponing cost-effective measures to prevent environmental degradation »

Two different issues : the intensity of action….

cost-benefit analysis ?

The organization of action. The international design.

The viewpoint taken here. The international design of climate policies With an increasing awareness of « political constraints »

Behind, some of the issues associated with planetaryeconomics

Being a benevolent world dictator ?

Basics : The dictator is powerful enough His thought is fed by modern economics

His solution : Super Kyoto. Trajectories of emissions / compatible with climate objectives, Global quota translated in national quotas; for all countries. A world market of carbon, a world price of carbon. Ecologists and economists reconciled ?

Control of the emissions volume. Minimum cost, strong incentives for innovation.

Discussions of the difficulties and merits. Choice of the trajectories and the problem of price expectations (RG MIT Press, 2001, 2005) Avoiding the « green paradox ». Compatible with regional or national carbon taxes,

Being a benevolent world dictator ?

Basics : The dictator is powerful enough His thought is fed by modern economics. He is sensitive to the question of distribution and « justice ».

His solution : Super Kyoto. With national quotas such that (too simplistic…) per capita quota are the same around the world ! Poor low emitters are winners, rich high emittors pay. Utopian : high hostility of the second..

A more general difficulty. The quota allocation, the hidden face the repartition of the costs of the climate policy. Necessarily conflictual. Hopeless !

Forgetting the benevolent world dictator ?

The benevolent dictator solution Metaphorically, a « great river », « grande rivière » We are going now to the category of « small rivers.

Small rivers, examples Can the world be organized .. From the collection of (unequally) virtuous coalitions ? Problems , cost,… 1- how can they protect themselves ?

Well designed Border Tax Adjustments provide protection; But do not prevent free riding.

The stability of such a system requires .. some kind of punishment for outsiders to the virtuous coalition. For example, import taxes for the outsiders (Nordhaus, 2015)

Other ideas of small rivers Martimort,…

From small rivers to small streams ?

The almost non cooperative solution Everybody brings its gift on the table (INDC), Likely to be (very ?) inefficient.

Is there something better although less ambitious than « smallrivers » i. e « small streams » (petits ruisseaux).

Small streams, examples A mutiplicity of small streams ? Linking regional carbon markets. Financing green fund with some kind of low level international

carbon tax, referring to per capita emissions ? A more virtuous finance ? Agreeing on the long run, easier but may be helpful. Spending money and providing clever incentives for innovation Shadow price of carbon for some projects ..